Exam 19: Working Capital Policy and Short-Term Financing

What is the inventory conversion period for O'Brian's if it has sales of $320,000, an average inventory of $5,333, and a cash conversion cycle of 20 days? Assume the cost of sales is 55% of sales.

Tefft Industries has an average inventory of $170,000, sells on terms of 2/10, net 30, and its cost of sales is $540,000. What is Tefft's inventory conversion period?

Laserscope has an inventory conversion period of 45 days, a receivables conversion period of 42 days, and a payables deferral period of 51 days. What is the length of its cash conversion cycle?

Sherwood Packing had sales of $3.2 million and a gross profit margin of 35% last year. If Sherwood's inventory averaged $0.4 million last year, what was the length of the inventory conversion period?

Lenders normally feel that the relative risk associated with short-term debt is ____ the risk associated with long-term debt.

With the matching approach to meeting the financing needs of the firm, fixed and permanent current assets are financed with _____.

An anticipated need for short-term borrowed funds is best shown in a(n) _____.

Computerized financial planning models may be classified as any of the following EXCEPT _____.

What is "stretching accounts payable," and what are the advantages and disadvantages of doing it?

When factoring accounts receivables, the "factor" is the _____.

Many ____ contain provisions requiring firms to maintain a minimum net working capital provision.

Last year, Bizmart had credit sales of $32 million and a net profit margin of 8%. If Bizmart had accounts receivable of $4.5 million, what was the length of the receivables conversion period?

If Swatch's inventory conversion period is 45 days, its payables deferral period is 35 days, and its receivables conversion period is 50 days, then its cash conversion cycle must be ____ days.

A firm's working capital position is important since it _____.

Factoring accounts receivable is usually done on a(n) _______ basis.

Efficient current assets management refers to the firm's ability to economize on which of the following? I. Inventory II. Marketable securities

When the level of working capital is increased, which of the following is not expected to occur?

Which of the accounts listed is not part of a firm's working capital?

The aggressive approach to the financing of a firm's current assets uses a ____ proportion of short-term debt and a ____ proportion of long-term debt.

If a firm shows a profit on the quarterly income statement, then _____.