8, 9 and 10 (8) (9) (10) FSA of Special İndustries, Short term financial

planning and Cash and Liquidity Management

43. Which one of the following statements is correct?

A. A firm with a restrictive financing policy secures sufficient long-term financing to fund all its
assets.
B. A firm with a flexible financing policy frequently invests in marketable securities.
C. A firm with a flexible financing policy tends to use short-term financing on a frequent basis.
D. Firms tend to avoid short-term financing under both restrictive and flexible financing policies.
E. Firms with seasonal sales must select flexible financing policies.

61. Mid-Western Markets has sales of $947,000 and costs of goods sold of $769,000. At the
beginning of the year, the inventory was $74,300. At the end of the year, the inventory balance
was $69,800. What is the inventory turnover rate?
A. 10.67 times
B. 12.78 times
C. 14.22 times
D. 9.37 times
E. 12.70 times

62. North Side Wholesalers has sales of $948,000. The cost of goods sold is equal to 68 percent
of sales. The firm has an average inventory of $23,000. How many days on average does it take
the firm to sell its inventory?
A. 12.30 days
B. 13.02 days
C. 16.48 days
D. 26.35 days
E. 29.68 days
67. Bradley’s has an inventory turnover rate of 8, a payables turnover rate of 7, and a receivables
turnover rate of 11. How long is the firm's
operating cycle?
A. 45.06 days
B. 78.81 days
C. 75.63 days
D. 30.13 days
E. 26.67 days

72. West Chester Automation has an inventory turnover of 17.5 and an accounts payable
turnover of 11. The accounts receivable period is 36 days. What is the length of the cash cycle?
A. 5.67 days
B. 23.68 days
C. 41.00 days
D. 52.00 days
E. 58.81 days

e. Typically, the largest expense for a bank will be

1. Employer benefits.
2. Occupancy expense.
3. Salaries.
4. Provision for loan losses.
5. Interest expense

f. The ratio that indicates the extent of equity ownership in a bank is the
1. Interest margin to average total assets.
2. Loss coverage ratio.
3. Loans to deposits.
4. Equity capital to total assets.
5. Deposits times capital.

a. A ratio that indicates how funds are supplied to a utility is

1. Return on assets.
2. Percent earned on operating property.
3. Operating ratio.
4. Funded debt to operating property.
5. Operating revenue to operating property.

b. A ratio that relates net earnings to the assets primarily intended to generate earnings
for a utility is
1. Return on assets.
2. Percent earned on operating property.
3. Operating ratio.
4. Funded debt to operating property.
5. Operating revenue to operating property.

40. A flexible short-term financial policy:

A. Maximizes cashouts.
B. Increases shortage costs due to frequent cash-outs.
C. Tends to decrease sales as compared to a restrictive policy.
D. Incurs more carrying costs than a restrictive policy.
E. Requires only a minimum investment in current assets.

4. Float is defined as the:

A. Amount of cash a firm can immediately withdraw from its bank account.
B. Difference between book cash and bank cash.
C. Change in a firm's cash balance from one accounting period to the next.
D. Amount of cash a firm has on hand.
E. Cash balance according to a firm's records.

5. A lockbox is a:
A. Special safe used by a firm for overnight storage of any cash or undeposited checks.
B. Special safe used by a firm that can only be opened at prespecified times of the day.
C. Box located in a bank's vault that is rented by a firm and used to hold unprocessed checks.
D. Special post office box which can only be opened by prespecified postal inspectors for direct
delivery to the addressee.
E. Post office box strategically located so that a firm's receivables can be collected faster.

47. The Hobby Shop has a checking account with a ledger balance of $692. The firm has $1,063
in uncollected deposits and $930 in outstanding checks. What is the amount of the disbursement
float on this account?
A. $0
B. $217
C. $930
D. $990
E. $1,063

48. On an average day, Plastics Enterprises writes 42 checks with an average amount of $587.
These checks clear the bank in an average of two days. What is the average amount of the
disbursement float?
A. $1,174
B. $5,805
C. $24,654
D. $49,308
E. $73,962

51. Your company has an available balance of $7,911. A deposit of $2,480 was made this
morning and is included in the bank's balance. There are four checks outstanding with a value of
$360 each. What is the net float?
A. Net collection float of $1,440
B. Net collection float of $2,480
C. Net float of $6,731
D. Net disbursement float of $1,300
E. Net disbursement float of $2,480

58. High Brow Express deals strictly with two customers. The payment from Customer A
averages $461,500 and has a collection delay of three days. Customer B’s average payment is
$648,000 and has a one-day delay. What is the weighted average delay assuming every month
has 30 days?
A. 1.79 days
B. 1.62 days
C. 2.02 days
D. 2.07 days
E. 1.83 days