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