Working Capital Management

7 questions

1. 1. We have the following information about a company:

   • No. of days of receivables = 58

   • No. of days of inventory = 40

   • No. of days of payables = 32

   What is the cash conversion cycle of the company?

   50 days66 days14 days
2. 2. Which of the following is an example of a pull on liquidity?
   Bad debtObsolete inventoryReduced credit limits by suppliers
3. 3. Which of the following would result in an increase in cash conversion cycle of a company?
   A decrease in receivables turnoverAn increase in inventory turnoverA decrease in payables turnover
4. 4. Assume that a company purchases a banker's acceptance for $19,000. It will mature in 90 days for $20,000. Calculate the discount-basis yield for the banker's acceptance.
   5%20%21.33%
5. 5. Assume that a company purchases a banker's acceptance for $19,000. It will mature in 90 days for $20,000. Calculate the bond-equivalent yield for the banker's acceptance.
   5%20%21.33%
6. 6. Which of the following will not result in a short-term cash flow improvement?
   Reducing trade payablesReducing inventoriesReducing trade receivables
7. 7. Which of the following is a primary source of liquidity for a firm?
   Negotiating debt contractsLiquidating short-term assetsTrade credit from suppliers