Ned's Co Has an Average Collection Period of 45 Days and and an Operating

question 103

Multiple Choice

Ned's Co. has an average collection period of 45 days and an operating cycle of 130 days. It has a policy of keeping at least $10 on hand as a minimum cash balance, and has a beginning cash balance for the first quarter of $20. Beginning receivables for the quarter amount to $35. Sales for the first and second quarters are expected to be $110 and $125, respectively, while purchases amount to 80% of the next quarter's forecast sales. The accounts payable period is 90 days.

What is the value of the payables account at the end of the first quarter?

• A) $88
• B) $100
• C) $110
• D) $112

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Definitions:

Index Model

A statistical model used to predict stock prices by relating the returns of each stock to the returns of an overall market index.

Standard Deviation

A measure of the dispersion of a set of data from its mean, indicating how spread out the data points are.

Return

A measure of the income generated by an investment relative to its cost, often expressed as a percentage.

Regression Equation

A statistical formula used to predict the value of a dependent variable based on one or more independent variables.