Exam 22: Managing the Firms Assets

Days sales outstanding should be decreased to increase accounts receivable conversion.

Why do small business managers tend to overbuy inventory?

Assuming that cash is available,payment for an account payable with terms of 3/10,net 30 should be made on day

A company with accounts payables of $35,000 and cost of goods sold of $300,000 would have days in payables of

Accounts payable ____ cash available for the firm when payment is made.

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 -The daily flow of resources through a firm's working capital accounts

The cash conversion period equals the days in inventory plus the days sales outstanding minus days in payables.

Match the term with its definition.Some terms may not be used. a.Cash conversion period b.Cost of capital c.Days in inventory d.Days in payables e.Days sales outstanding f.Lock box g.Pledged accounts receivable h.Working capital management -A post office box for receiving remittances from customers

Assume that the cost of certain equipment a business is considering purchasing is $100,000.The equipment will be depreciated over five years,at which point the salvage value is expected to be $8,000.Anticipated after-tax profits (losses)are as follows: Year After-Tax Profits/Losses 1 ($10,000) 2 20,000 3 25,000 4 35,000 5 20,000 Compute the accounting return on investment technique showing the formulas and computations.

"How does the present value of future benefits from the investment compare to the initial investment outlay?" is answered using

The internal rate of return method estimates the rate of return that can be expected from a contemplated investment.

An understanding of the present value of a future dollar is important when one is using

A company should pay accounts payable on Day 30 if funds are available.

Discuss cash flow characteristics of firms that have a cash culture in relation to the recession.

The cash conversion period is the time between

Shelly is a photographer who sells her original copyrighted photographs to regional and national magazines for illustrations of written articles.She has noticed a slowdown in payment and needs suggestions as to what she can do to decrease her average collection period.

Every component of working capital has two dimensions: interest and money.

The extensive use of discounted cash flow tools by a small firm probably has more to do with the nature of the small firm itself than it does with the owner's desire to be perceived as a community-minded business person..

Many small business owners do not use discounted cash flow techniques.What are the reasons why they do not?

Which statement is true concerning inventory management programs?