Financial Accounting
4th Edition
ISBN: 9780134125053
Author: Kemp, Robert S., Waybright, Jeffrey.
Publisher: Pearson Education,
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Chapter 12, Problem 7SC
To determine
Identify the ratio that would indicate the problem of severe cash shortage due to its inability to collect
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The company can repay its debt or invest if:
O a. the opening cash balance plus the cash receipts is less than the cash needed for disbursement in the
budget period
O b. None of the given answers.
O c. the cash needed for disbursement is less than the total of the opening cash balance plus the cash
receipts in the budget period
O d. there is a cash deficiency in the budget period.
O e. total cash available is less than the cash needed for expenditure in the budget period.
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Which of the following statement is true ?
Answer choices :
I. Increase in collection of cash from customer will lead to decrease in days of payable outstanding .
II . Increase in credit sales of the company will lead to increase in days of payable outstanding .
III . Decrease in average accounts payable will cause decrease in accounts payable turnover ratio .
IV . All the above statements are false .
A company is expecting a temporary negative cash flow. Discuss the benefits of funding the
deficit
by arranging an overdraft facility with its bank
Chapter 12 Solutions
Financial Accounting
Ch. 12 - Prob. 1DQCh. 12 - Which amount is the base amount for vertical...Ch. 12 - Prob. 3DQCh. 12 - Prob. 4DQCh. 12 - Prob. 5DQCh. 12 - Prob. 6DQCh. 12 - Prob. 7DQCh. 12 - How would you expect a recession to affect asset...Ch. 12 - Prob. 9DQCh. 12 - Prob. 10DQ
Ch. 12 - Prob. 1SCCh. 12 - Prob. 2SCCh. 12 - Prob. 3SCCh. 12 - Prob. 4SCCh. 12 - Prob. 5SCCh. 12 - Prob. 6SCCh. 12 - Prob. 7SCCh. 12 - Prob. 8SCCh. 12 - Prob. 9SCCh. 12 - Prob. 10SCCh. 12 - Prob. 11SCCh. 12 - Prob. 12SCCh. 12 - Prob. 1SECh. 12 - Prob. 2SECh. 12 - Prob. 3SECh. 12 - Prob. 4SECh. 12 - Prob. 5SECh. 12 - Prob. 6SECh. 12 - Prob. 7SECh. 12 - Prob. 8SECh. 12 - Prob. 9SECh. 12 - Prob. 10SECh. 12 - Prob. 11AECh. 12 - Prob. 12AECh. 12 - Horizontal analysis(Learning Objective 2)15-20...Ch. 12 - Prob. 14AECh. 12 - Prob. 15AECh. 12 - Prob. 16AECh. 12 - Prob. 17AECh. 12 - Prob. 18AECh. 12 - Prob. 19AECh. 12 - Prob. 20AECh. 12 - Horizontal analysis(Learning Objective 2)15-20...Ch. 12 - Prob. 22BECh. 12 - Prob. 23BECh. 12 - Prob. 24BECh. 12 - Prob. 25BECh. 12 - Prob. 26BECh. 12 - Prob. 27BECh. 12 - Prob. 28BECh. 12 - Prob. 29BECh. 12 - Prob. 30BECh. 12 - Prob. 31APCh. 12 - Prob. 32APCh. 12 - Prob. 33APCh. 12 - Prob. 34APCh. 12 - Prob. 35APCh. 12 - Prob. 36APCh. 12 - Prob. 37BPCh. 12 - Prob. 38BPCh. 12 - Prob. 39BPCh. 12 - Prob. 40BPCh. 12 - Prob. 41BPCh. 12 - Prob. 42BPCh. 12 - Prob. 1CECh. 12 - Prob. 1CPCh. 12 - Prob. 1EIACh. 12 - Prob. 2EIACh. 12 - Prob. 1FACh. 12 - Prob. 1IACh. 12 - Prob. 1SBACh. 12 - Prob. 1WC
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Similar questions
- Which of the following is/are a sign that a company cannot quickly turn its receivables into cash (may have more than one answer)? Check All That Apply a)A low receivables turnover ratio. b)A low average collection period. c)A high receivables turnover ratio. d)A high average collection period.arrow_forwardWhich of the following best represents a positive product of a lower number of days sales in receivables ratio? A. collection of receivables is quick, and cash can be used for other business expenditures B. collection of receivables is slow, keeping cash secured to receivables C. credit extension is lenient D. the lender only lends to the top 10% of potential creditorsarrow_forwardThe companies dispose their accounts receivable because _____________ a. of shortage of accounting staff b. there are other ways to earn cash c. billing and collection expense are costly d. the accounts receivable are all goodarrow_forward
- The company can repay its debt or invest if: O a. the opening cash balance plus the cash receipts is less than the cash needed for disbursement in the budget period O b. there is a cash deficiency in the budget period. Oc. None of the given answers. O d. the cash needed for disbursement is less than the total of the opening cash balance plus the cash receipts in the budget period e. total cash available is less than the cash needed for expenditure in the budget period.arrow_forward3. Which of the following could lead to cash flow problem (a) Obsolete inventory, increasing notes payable, easing of credit by suppliers. (b) Slow-moving inventory, accounts receivable of inferior quality, tightening of credit by suppliers. (c) Obsolete inventory, improved quality of accounts receivable, easing of credit by suppliers. (d) Obsolete inventory, accounts receivable of inferior quality, easing of credit by suppliers.arrow_forwardThe establishment and usage of a zero-balance account in relation to the cash management strategies of a firm generally decreases all except one a. any excess bank balance b. processing time c. any disbursement float d. the annual cost of casharrow_forward
- The companies dispose their accounts receivables due to a. Shortage of accounting staff b. Billing and collection expense are costly c. There are other ways to earn cash d. The accounts receivable are all goodarrow_forwardAs a result of the COVID-19 crisis, company A has decided to sell its receivables to a bank in exchange for cash. What would be the effect of this financial decision on the company's current ratio, quick ratio and cash ratio?arrow_forwardThe cash cycle is longer than the operating cycle when Select one: a. Inventory period is positive b. Account receivable period is positive c. Account payable period is positive d. Receivable cannot be collected from customers e. None of the above answers is correctarrow_forward
- Which of the following is/are a sign that a company can quickly turn its receivables into cash (may have more than one answer)? Check All That Apply a)A high average collection period. b)A low average collection period. c)A low receivables turnover ratio. d)A high receivables turnover ratio.arrow_forward:The company can repay its debt or invest if the opening cash balance plus the cash receipts is less than the cash needed for disbursement in the budget period .a O .None of the given answers .b O the cash needed for disbursement is less than the total of the opening cash balance plus the cash receipts in the budget period .c O .total cash available is less than the cash needed for expenditure in the budget period .d O there is a cash deficiency in the budget period .e Oarrow_forwardWhich of the following statements is false? O A. A positive cash conversion cycle means the company is paying its payables before receiving its receivables. B. A negative cash conversion cycle means the company is collecting its receivable before paying its payables. C. The cash conversion cycle is the length of time required for the company to recieve its inventory and then receive cash from the sales of its inventory. D. All of the above statements are true.arrow_forward
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