FIN 571 NERD Education Specialist /fin571nerd.com FIN 571 NERD Education Specialist /fin571nerd.com | Page 38

earnings as: 11.Marcie's Mercantile wants to maintain its current
dividend policy, which is a payout ratio of 35 percent. The firm does
not want to increase its equity financing but is willing to maintain its
current debt-equity ratio. Given these requirements, the maximum
rate at which Marcie's can grow is equal to: 12.The sustainable
growth rate will be equivalent to the internal growth rate when, and
only when,: 13.The minimum level of inventory that a firm wants to
keep on hand at all times is referred to as: 14.The operating cycle can
be decreased by: 15.The cash cycle is defined as the time between:
16.Selling goods and services on credit is: 17.The three components
of credit policy are: 18.Given a fixed level of sales and a constant
profit margin, an increase in the accounts payable period can result
from: 19.On September 1, a firm grants credit with terms of 2/10 net
30. The creditor: 20.The credit period begins on the: 21.When credit
is granted to another firm this gives rise to a(n): 22.Since the credit
decision usually includes riskier customers, the decision should adjust
for this by: 23.Jordan and Sons has an inventory period of 48.6 days,
an accounts payable period of 36.2 days, and an accounts receivable
period of 29.3 days. Management is considering offering a 5 percent
discount if its credit customers pay for their purchases within 10 days.
This discount is expected to reduce the receivables period by 17 days.
If the discount is offered, the operating cycle will decrease from ___
days to ___ days. 24.Brown’s Market currently has an operating cycle
of 76.8 days. It is planning some operational changes that are
expected to decrease the accounts receivable period by 2.8 days and
decrease the inventory period by 3.1 days. The accounts payable
turnover rate is expected to increase from 9 to 11.5 times per year. If
all of these changes are adopted, what will be the firm's new operating
cycle? 25.On average, D & M sells its inventory in 37 days, collects
on its receivables in 3.4 days, and takes 35 days to pay for its
purchases. What is the length of the firm’s operating cycle? 26.A firm
has an inventory turnover rate of 15.7, a receivables turnover rate of
20.2, and a payables turnover rate of 14.6. How long is the cash
cycle?
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FIN 571 Week 3 DQ 1