MEMO – FIN3702 OCT/NOV 2019
+27815657602
, MCQ QUESTIONS 1 to 30
ANSWER EXPLANATION
1 2 Greater degree of liquidity
2 3 Just in Time
3 4 Accounts Payable are the major source of unsecured short-term
financing for business firms.
4 3 OC = AAI + ACP
Therefore, 120 days = AAI + 49 days
AAI = 120 – 49 = 71 days
Average age of inventory (AAI) = 365 /Inventory turnover days
Inventory turnover = 365days/71day
= 5.1 times
5 2 Amount invested in the cash conversion cycle (CCC) per day
= (R2 500 00/360)
= 6 849.32
Reduction on the CCC = 10days
Annual saving under this measure
= R6 849.32 x 0.085
= R5 822
6 3 The carrying cost is defined as the cost of carrying a unit per
period multiplied by the firm’s average inventory.
Total CC = C x Q/2
= R1.5 x 2 000
= R3 000
7 2 Factoring accounts receivable involves selling them outright, at a
discount, to a financial institution.
+27815657602
+27815657602
, MCQ QUESTIONS 1 to 30
ANSWER EXPLANATION
1 2 Greater degree of liquidity
2 3 Just in Time
3 4 Accounts Payable are the major source of unsecured short-term
financing for business firms.
4 3 OC = AAI + ACP
Therefore, 120 days = AAI + 49 days
AAI = 120 – 49 = 71 days
Average age of inventory (AAI) = 365 /Inventory turnover days
Inventory turnover = 365days/71day
= 5.1 times
5 2 Amount invested in the cash conversion cycle (CCC) per day
= (R2 500 00/360)
= 6 849.32
Reduction on the CCC = 10days
Annual saving under this measure
= R6 849.32 x 0.085
= R5 822
6 3 The carrying cost is defined as the cost of carrying a unit per
period multiplied by the firm’s average inventory.
Total CC = C x Q/2
= R1.5 x 2 000
= R3 000
7 2 Factoring accounts receivable involves selling them outright, at a
discount, to a financial institution.
+27815657602
