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davenport finc620 week 6 quiz

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Question;?;Q1;Which of the following statements is CORRECT?;?;Question 2;2 out of 2 points;Which of the following is NOT a;situation that might lead a firm to increase its holdings of short-term;marketable securities?;?;Question 3;2 out of 2 points;Data on Wentz Inc. for 2008 are shown below, along with the payables;deferral period (PDP) for the firms against which it benchmarks. The firm's;new CFO believes that the company could delay payments enough to increase its;PDP to the benchmarks' average. If this were done, by how much would payables;increase? Use a 365-day year.;Cost of goods sold =;$75,000;Payables =;$;5,000;Payables deferral period (PDP) =;24.33;Benchmark payables deferral period =;30.00;?;Question 4;2 out of 2 points;Romano Inc. has the following data. What is the firm's cash conversion;cycle?;Inventory conversion period =;38 days;Average collection period =;19 days;Payables deferral period =;20 days;?;Question 5;0 out of 2 points;Whittington Inc. has the following data. What is the firm's cash;conversion cycle?;Inventory conversion period =;41 days;Average collection period =;31 days;Payables deferral period =;38 days;?;Question 6;2 out of 2 points;Helena Furnishings wants to reduce its;cash conversion cycle. Which of the following actions should it take?;?;Question 7;2 out of 2 points;Edwards Enterprises follows a moderate current;asset investment policy, but it is now considering a change, perhaps to a;restricted or maybe to a relaxed policy. The firm's annual sales are;$400,000, its fixed assets are $100,000, its target capital structure calls;for 50% debt and 50% equity, its EBIT is $35,000, the interest rate on its;debt is 10%, and its tax rate is 40%. With a restricted policy, current;assets will be 15% of sales, while under a relaxed policy they will be 25% of;sales. What is thedifference in the projected ROEs between the;restricted and relaxed policies?;?;Question 8;2 out of 2 points;Zarruk Construction's DSO is 50 days (on a;365-day basis), accounts receivable are $100 million, and its balance sheet;shows inventory of $125 million. What is the inventory turnover ratio?;?;Question 9;2 out of 2 points;Desai Inc. has the following data, in thousands. Assuming a 365-day;year, what is the firm's cash conversion cycle?;Annual sales =;$45,000;Annual cost of goods sold =;$30,000;Inventory =;$;4,500;Accounts receivable =;$;1,800;Accounts payable =;$;2,500;?;Question 10;2 out of 2 points;Which of the following statements is most consistent with;efficient inventory management? The firm has a;?;Question 11;2 out of 2 points;Cass & Company has the following data. What is the firm's cash;conversion cycle?;Inventory conversion period =;50 days;Average collection period =;17 days;Payables deferral period =;25 days;?;Question 12;2 out of 2 points;Bumpas Enterprises purchases $4,562,500 in goods;per year from its sole supplier on terms of 2/15, net 50. If the firm chooses;to pay on time but does not take the discount, what is the effective;annual percentage cost of its non-free trade credit? (Assume a;365-day year.);?;Question 13;2 out of 2 points;Kirk Development buys on terms of 2/15, net 60 days.;It does not take discounts, and it typically pays on time, 60 days after the;invoice date. Net purchases amount to $550,000 per year. On average, what is;the dollar amount of total trade credit (costly + free) the firm receives;during the year, i.e., what are its average accounts payable? (Assume a;365-day year, and note that purchases are net of discounts.);?;Question 14;2 out of 2 points;Other things held constant, which of the following;would tend to reduce the cash conversion cycle?;?;Question 15;2 out of 2 points;Edison Inc. has annual sales of $36,500,000, or;$100,000 a day on a 365-day basis. The firm's cost of goods sold is 75% of;sales. On average, the company has $9,000,000 in inventory and $8,000,000 in;accounts receivable. The firm is looking for ways to shorten its cash;conversion cycle. Its CFO has proposed new policies that would result in a;20% reduction in both average inventories and accounts receivable. She also;anticipates that these policies would reduce sales by 10%, while the payables;deferral period would remain unchanged at 35 days. What effect would these;policies have on the company's cash conversion cycle? Round to the nearest;whole day.

 

Paper#50575 | Written in 18-Jul-2015

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