FNAN 522 - CH. 18 Class
Practice Problems with
complete verified solutions
2025
Your firm has an inventory turnover rate of 14, a payables
turnover rate of 8, and a receivables turnover rate of 19.
How long is your firm's operating cycle? - answer 45.28
days
Metal Products Co. has an inventory period of 53 days, an
accounts payable period of 68 days, and an accounts
receivable turnover rate of 18. What is the length of the
cash cycle? - answer 5.28 days
A flexible short-term financial policy:
I. increases shortage costs due to frequent cash-outs.
II. tends to increase sales as compared to a restrictive
policy.
III. requires a sizeable investment in current assets.
IV. incurs more carrying costs than a restrictive policy. -
answer II, III, and IV only
The Lumber Mart recently replaced its management team.
As a result, the firm is implementing a restrictive short-
term policy in place of the flexible policy under which the
firm had been operating. Which of the following should
the employees expect as a result of this policy change?
Practice Problems with
complete verified solutions
2025
Your firm has an inventory turnover rate of 14, a payables
turnover rate of 8, and a receivables turnover rate of 19.
How long is your firm's operating cycle? - answer 45.28
days
Metal Products Co. has an inventory period of 53 days, an
accounts payable period of 68 days, and an accounts
receivable turnover rate of 18. What is the length of the
cash cycle? - answer 5.28 days
A flexible short-term financial policy:
I. increases shortage costs due to frequent cash-outs.
II. tends to increase sales as compared to a restrictive
policy.
III. requires a sizeable investment in current assets.
IV. incurs more carrying costs than a restrictive policy. -
answer II, III, and IV only
The Lumber Mart recently replaced its management team.
As a result, the firm is implementing a restrictive short-
term policy in place of the flexible policy under which the
firm had been operating. Which of the following should
the employees expect as a result of this policy change?
