Question 1

What are cash flows? What must a small business owner know in order to calculate cash flows?

Accepted Answer

A firm's cash flows consist of cash flow

Question 2

Use of the accounting return on investment technique answers the question, "How long will it take to recover the original investment outlay?"

Accepted Answer

A) True 
 B)False

Question 3

Nicholas would like to improve the management of his company's accounts payable. One metric he might find useful is

Accepted Answer

A)  days in credit. 
B)  days in inventory. 
C)  days in payables. 
D)  the average collection period. 
A)  days in credit. 
B)  days in inventory. 
C)  days in payables. 
D)  the average collection period.

Question 4

Match the term with its definition.
-The number of days, on average, that a firm extends credit to its customers

Accepted Answer

A) cash conversion period 
B) days in inventory 
C) days in payables 
D) days sales outstanding (average collection period) 
E) lock box
F)working capital cycle
G)working capital management 
A) cash conversion period 
B) days in inventory 
C) days in payables 
D) days sales outstanding (average collection period) 
E) lock box
F)working capital cycle
G)working capital management

Question 5

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

Accepted Answer

A)  3. 
B)  10. 
C)  13. 
D)  30. 
A)  3. 
B)  10. 
C)  13. 
D)  30.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Match the term with its definition.
-Capital budgeting techniques that compare the present value of future cash flow with the cost of the initial investment

Accepted Answer

A) accounting return on investment technique 
B) capital budgeting analysis 
C) discounted cash flow (DCF) techniques 
D) internal rate of return (IRR) 
E) net present value (NPV)
F)payback period technique
G)pledged accounts receivable 
A) accounting return on investment technique 
B) capital budgeting analysis 
C) discounted cash flow (DCF) techniques 
D) internal rate of return (IRR) 
E) net present value (NPV)
F)payback period technique
G)pledged accounts receivable

Question 8

Accounts receivable typically are collected and become cash within _____ following a sale.

Accepted Answer

A)  30 days 
B)  30 to 60 days 
C)  60 to 90 days 
D)  six months 
A)  30 days 
B)  30 to 60 days 
C)  60 to 90 days 
D)  six months

Question 9

Match the term with its definition.
-The present value of expected future cash flows less the initial investment outlay

Accepted Answer

A) accounting return on investment technique 
B) capital budgeting analysis 
C) discounted cash flow (DCF) techniques 
D) internal rate of return (IRR) 
E) net present value (NPV)
F)payback period technique
G)pledged accounts receivable 
A) accounting return on investment technique 
B) capital budgeting analysis 
C) discounted cash flow (DCF) techniques 
D) internal rate of return (IRR) 
E) net present value (NPV)
F)payback period technique
G)pledged accounts receivable

Question 10

Survival often becomes the top priority when the undercapitalization and liquidity problems of a small business directly affect the decision-making process.

Accepted Answer

A) True 
 B)False

Question 11

Management should be working continuously to shorten the working capital cycle.

Accepted Answer

A) True 
 B)False

Question 12

"How many dollars in average profits are generated per dollar of average investment?" is answered using which of the following capital budgeting techniques?

Accepted Answer

A)  Accounting return on investment 
B)  Net present value (NPV) 
C)  Internal rate of return (IRR) 
D)  Investment outlay valuation 
A)  Accounting return on investment 
B)  Net present value (NPV) 
C)  Internal rate of return (IRR) 
D)  Investment outlay valuation

Question 13

Match the term with its definition.
-A post office box for receiving remittances from customers

Accepted Answer

A) cash conversion period 
B) days in inventory 
C) days in payables 
D) days sales outstanding (average collection period) 
E) lock box
F)working capital cycle
G)working capital management 
A) cash conversion period 
B) days in inventory 
C) days in payables 
D) days sales outstanding (average collection period) 
E) lock box
F)working capital cycle
G)working capital management

Question 14

_____ take(s) into consideration the fact that cash received today is more valuable than cash received one year from now.

Accepted Answer

A)  The payback period technique 
B)  Discounted cash flow (DCF) techniques 
C)  The accounting return on investment technique 
D)  The investment outlay valuation technique 
A)  The payback period technique 
B)  Discounted cash flow (DCF) techniques 
C)  The accounting return on investment technique 
D)  The investment outlay valuation technique

Question 15

"How long will it take to recover the original investment outlay?" is answered using which of the following capital budgeting techniques?

Accepted Answer

A)  Accounting ratio analysis 
B)  Discounted cash flows 
C)  Net present value (NPV) 
D)  Payback period 
A)  Accounting ratio analysis 
B)  Discounted cash flows 
C)  Net present value (NPV) 
D)  Payback period

Question 16

Calculating cash flows requires that a small business owner be able to distinguish between sales revenue and cash receipts and between expenses and disbursements.

Accepted Answer

A) True 
 B)False

Question 17

Inventory is a concern only for manufacturing companies.

Accepted Answer

A) True 
 B)False

Question 18

Discounted cash flow (DCF) techniques take into consideration the fact that cash received today is more valuable than cash received one year from now.

Accepted Answer

A) True 
 B)False

Question 19

Match the term with its definition.
-The number of days, on average, that a company holds inventory

Accepted Answer

A) cash conversion period 
B) days in inventory 
C) days in payables 
D) days sales outstanding (average collection period) 
E) lock box
F)working capital cycle
G)working capital management 
A) cash conversion period 
B) days in inventory 
C) days in payables 
D) days sales outstanding (average collection period) 
E) lock box
F)working capital cycle
G)working capital management

Question 20

Accounting profits are identical to actual cash flows.

Accepted Answer

A) True 
 B)False

Exam 22: Managing the Firms Assets

What are cash flows? What must a small business owner know in order to calculate cash flows?

Use of the accounting return on investment technique answers the question, "How long will it take to recover the original investment outlay?"

Nicholas would like to improve the management of his company's accounts payable. One metric he might find useful is

Match the term with its definition. -The number of days, on average, that a firm extends credit to its customers

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

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

Match the term with its definition. -Capital budgeting techniques that compare the present value of future cash flow with the cost of the initial investment

Accounts receivable typically are collected and become cash within _____ following a sale.

Match the term with its definition. -The present value of expected future cash flows less the initial investment outlay

Survival often becomes the top priority when the undercapitalization and liquidity problems of a small business directly affect the decision-making process.

Management should be working continuously to shorten the working capital cycle.

"How many dollars in average profits are generated per dollar of average investment?" is answered using which of the following capital budgeting techniques?

Match the term with its definition. -A post office box for receiving remittances from customers

_____ take(s) into consideration the fact that cash received today is more valuable than cash received one year from now.

"How long will it take to recover the original investment outlay?" is answered using which of the following capital budgeting techniques?

Calculating cash flows requires that a small business owner be able to distinguish between sales revenue and cash receipts and between expenses and disbursements.

Inventory is a concern only for manufacturing companies.

Discounted cash flow (DCF) techniques take into consideration the fact that cash received today is more valuable than cash received one year from now.

Match the term with its definition. -The number of days, on average, that a company holds inventory

Accounting profits are identical to actual cash flows.

The Entrepreneurial Lifethe Entrepreneurial Life

Integrity, Ethics, and Social Entrepreneurship

Starting a Small Business

Franchises and Buyouts

The Family Business

The Business Plan: Visualizing the Dream

The Marketing Plan

The Organizational Plan: Teams, Legal Structures, Alliances, and Directors

The Location Plan

Understanding a Firms Financial Statements

Forecasting Financial Requirements

A Firms Sources of Financing

Planning for the Harvest

Building Customer Relationships

Product Development and Supply Chain Management

Pricing and Credit Decisions

Promotional Planning

Global Opportunities for Small Businesses

Professional Management and the Small Business

Managing Human Resources

Managing Small Business Operations

Managing Risk

Filters