Identify which of the following will increase the operating cycle.
Subject: Business / Finance
Question
1. Identify which of the following will increase the operating cycle. Choose only one.
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decrease in accounts payable period
decrease in accounts receivable turnover ratio
increase in accounts payable turnover ratio
increase in cash cycle
decrease in inventory period
2. ABC Company currently has a cash cycle of 199 days. The firm is considering making some changes as follows: (i) increase the inventory period by 22 days, (ii) decrease the accounts receivable period by 15 days on average, and (iii) decrease the accounts payable period will be decreased by 38 days. Calculate the number of days in the new cash cycle after the above changes become effective? That is, what is the new cash cycle?
3. You are given the following quotes:
U.S. dollar/Mexican Peso = 0.0601
U.S. dollar/Singapore Dollar = 0.7591
U.S dollar/Chinese Yuan = 0.1876
What is the Chinese Yuan/Singapore Dollar cross rate?
Enter your answer rounded off to FOUR decimal points.
4. The exchange rates in New York for $1 are C$1.215 and £0.8105. A dealer is offering the following quote: C$1 will buy £0.9168. What is the profit you can earn on $28,500 using triangle arbitrage?
5. ABC Company has annual sales of $568,841. The cost of goods sold are $418,411. The firm has an accounts receivable balance of $24,797 and an accounts payable balance of $18,153. How many days does it take the firm to pay its suppliers? Assume 365 days.
Enter your answer rounded off to two decimal points.
6. ABC Company has the following projected sales:
Month
Sales $
April
49,682
May
21,179
June
31,256
July
30,835
?ABC collects 64 percent of its sales in the month of sale, 20 percent in the month following the month of sale, and another 1 percent in the second month following the month of sale. The remainder is bad debts and is not collected. What is the amount of the July collections?
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
7. ABC’s credit terms are 1/7, net 25. Based on experience, 33 percent of all customers take the discount. ABC has annual credit sales of $163,710. What is the average investment in accounts receivable as shown on the balance sheet?
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box.
8. Annual demand 144,878 units
Carrying costs $3.44 per unit
Fixed Costs per order $4.9
Number of orders 52
What are the total costs?
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box.
9. ABC Inc. just paid its first annual dividend of $4.78 a share. The firm plans to increase the dividend by 6.7 percent per year indefinitely. What is the firm’s cost of equity if the current stock price is $76.9 a share?
Enter your answer in percentages rounded off to two decimal points.
