Exam 22: Managing the Firms Assets

Match the term with its definition.Some terms may not be used. a.Accounting return on investment technique b.Capital budgeting analysis c.Discounted cash flow techniques d.Internal rate of return e.Net present value f.Payback period technique g.Working capital cycle h.Working capital management -An analytical method that helps managers make decisions about long-term investments

Days in inventory is equal to the number of days a firm waits to be paid for inventory that has been sold.

After discussing three techniques for making capital budgeting decisions,which one(s)incorporate the time value of money?

A company has 30 days in payables,15 days in inventory,and 20 days for the average collection period.How many days are in the company's cash conversion process?

Which statement is true about firms with a cash culture?

During the cash conversion period,the firm has the benefit of the financing provided by the supplier.

Jane has started a gift basket company that specializes in regional products.Several corporations use her baskets for the holidays,to welcome new employees,and for their sales staff to use as gifts for corporate clients.Because she noticed her average collection period from last quarter to this quarter had doubled to 60 days,she then realized the company's days in inventory has increased from 30 to 40 days and the days in payables dropped from 35 to 30 days.After calculating each quarter's cash conversion periods,what do the changes indicate?

Working capital management focuses on the attractiveness of long-run investment opportunities.

What are key issues in managing accounts payable?

The percentage annual interest rate is the rate a business will pay by not taking a discount.

A reason that a small firm would not use a discounted cash flow technique in evaluating capital investments would be

Under the NPV method,the rate of return required to satisfy the firm's investors is the

After defining capital budgeting,give examples of the types of capital budgeting decisions a small business owner would make.

Pearl has been asked by her boss to manage the company's working capital.This means Pearl is now in charge of

Capital budgeting analysis helps managers make decisions about inventory investments.

Nadine would like to improve the management of inventory in her company.One of her first activities should be to:

In managing accounts payable,the principle of "Buy now,pay later" allows the small business to postpone a payment.

The average collection period is the number of days that a firm extends credit to its customers.

Madeleine would like to know how long it takes,on average,from the time inventory is received until it is sold.Madeleine is interested in the:

Ralph has always enjoyed fireworks and has set up a booth between June 4th through July 4th.Additional inventory is scheduled to be sent throughout the month.Ralph is now wondering if he has ordered too much.List three reasons that could have motivated Ralph in his inventory buying.