Assignment:
1. Mr. Cruz borrowed P100,000 from BPI at a stated rate of 6% payable over a period of one-year. What is the effective interest rate if the loan is discounted?
a) 6.38%
b) 6%
c) 7%
d) 5.66%
2. It is the amount of time that elapses from the point when the firm inputs material and labor into the production process to the point when cash is collected from the sale of the finished product that contains these production inputs.
a) cash conversion cycle
b) average age of inventory
c) operating cycle
d) average collection period
3. What is the inventory period for a firm with an annual cost of goods sold of P5 million, P1.2 million in average inventory, and a cash conversion cycle of 75 days?
a) 86.5 days
b) 18 days
c) 32.60 days
d) 27.50 days
4. A firm has an average age of inventory of 60 days, an average collection period of 40 days, and an average payment period of 30 days. The firm's operating cycle is
a) 10 days
b) 90 days
c) 100 days
d) 130 days
5. The company sells on terms 2/10, net 30. Total sales for the year are P1,000,000, of which P100,000 are on cash basis. Half of the customers pay on the tenth day and take discounts on average, 40 days after their purchases. What is the average amount of receivables?
a) P62,500
b) P69,444.44
c) P20,408.16
d) P10,204.08
6. The purpose of managing current assets and current liabilities is to
a) achieve as low a level of current assets as possible.
b) achieve as low a level of current liabilities as possible.
c) achieve a balance between profitability and risk that contributes to the firm's value.
d) achieve as high a level of current liabilities as possible.