1. Which one of the following industries tends to have the longest cash cycle?
a. restaurants
b. fabric retailer
c. apparel retailers
d. gas station
e. medical devices
2. Which one of the following is a use of cash?
a. Selling a fixed asset such as a piece of machinery
b. Selling inventory at cost
c. Paying a supplier for inventory you purchased last month
d. Borrowing money from a local bank
e. Collecting payment from a customer
3. Which one of the following statements is correct concerning the accounts payable period?
a. An increase in the accounts payable period will increase the operating cycle, all else equal.
b. The accounts payable period is equal to the cost of goods sold divided by the average accounts payable.
c. Extending the accounts payable period effectively decreases the cash needs of a firm.
d. Managers generally prefer a shorter accounts payable period than a longer one.
e. Increasing the accounts payable turnover rate increases the accounts payable period.