FIN 571 TUTOR Let's Do This /fin571tutor.com FIN 571 TUTOR Let's Do This /fin571tutor.com | Page 62

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
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