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13 Cards in this Set

  • Front
  • Back
Operating cycle
The period between the acquisition of inventory and the collection of cash from receivables.
Inventory period
The time it takes to acquire and sell inventory.
Accounts receivable period
The time between sale and inventory and collection of the receivable.
Accounts payable period
The time between receipt of inventory and payment for it.
Cash cycle
The time between cash disbursement and cash collection.
Cash flow time line
A graphical representation of the operating cycle and the cash cycle.
Carrying costs
Costs that rise with increases in the level of investment in current assets
Shortage costs
Costs that fall with increases in the level of investment in current assets.
Cash budget
A forecast of cash receipts and disbursements for the next planning period.
Line of credit
A formal (committed) or informal (noncommitted) prearranged, short-term bank loan.
Compensating balance
Money kept by the firm with a bank in low-interest or non-interest-bearing accounts as part of a loan agreement.
Accounts receivable financing
A secured short-term loan that involves either the assignment or the factoring of receivables.
Inventory loan
A secured short-term loan to purchase inventory.