Exam 13: The Management of Working Capital

A company wishes to reduce the amount of working capital it requires to finance its operations.Which of the following would be the least effective way of reducing working capital requirements?

If inventory is turned over 7 times a year,the inventory turnover period in days is:

Credit policy is composed of:

Items which comprise inventory are:

Total purchases are $130,000 and credit purchases are 80% of total purchases.If accounts payable at the beginning of the period are $15,000 and at the end of the period are $13,000,the average settlement period for accounts payable,in days,is:

The firm's operating cash cycle is:

Which of these is not a cost of holding insufficient levels of inventory?

If the planned level of sales is $146,000 and the planned average collection period is 40 days,the planned average level of accounts receivable will be:

Wonderland has a plant that manufactures computer chips.Expected demand for these chips in March 2015 is 52,000 units.Wonderland estimates the cost per purchase order to be $25.The monthly holding cost for one chip is 5c. REQUIRED: A)i)Compute the economic order quantity for the chips. ii.Compute the number of orders in March 2015. B)List the motives for holding cash in a business. C)Name at least four factors that influence the length of the credit period in a business.

Management of working capital is important because it affects the firm's:

A firm has annual credit sales of $5,000,000 and an average collection period of 52 days.What is their average accounts receivable balance,assuming a 365-day year?

Chocolate Ltd uses 18,000 litres of chocolate syrup each year.The cost of holding its chocolate syrup inventory is $0.50 per litre per year.The cost of ordering the syrup is $150 per delivery.The firm uses chocolate syrup at a constant rate throughout the year.The economic order quantity for chocolate syrup is:

Which of the following is the most useful tool for managing cash?

Pink company expects demand for a product to be 12,005 units annually.It costs $5 per unit to hold inventory for one year.Order costs are $50 per order.The economic order quantity is:

Improving cash flow in relation to debtors and accounts payable respectively,requires:

The holding of cash to meet the firms day-to day commitments means that cash is being held for a:

If accounts payable are paid 12 times a year,what,on average,is the accounts payable turnover period in days?

If sales are $850,000,the cost of sales is $500,000 and average inventory is $55,000,the average time taken to sell inventory in days is:

The ABC system of managing inventory:

Because of uncertainty of demand,a firm may choose to hold an additional amount of inventory called: