Exam 17: Working Capital Management

Which of the following characteristics apply to U.S.Treasury bills? I.Interest income taxed at both the federal and state level II.Minimal, if any, default risk III.Marketable, but not liquid IV.Short maturities

Holding cash simply as a financial reserve is referred to as the ____ motive.

Which of these refers to a customer's willingness to meet his or her credit obligations?

The graphical representation of the sum of the carrying costs and the opportunity costs of a credit policy is called the:

Al's Bakery has a checkbook balance of $1,650.A $700 deposit was made today and will be added to the available balance tomorrow.There are two outstanding checks that total to $623 that should clear tomorrow.There are no other outstanding items.Which one of the following statements accurately reflects this situation?

AJ's Market generally holds $50,000 in cash in case an unexpected investment opportunity arises.This is an example of the ____ motive for holding cash.

Which of these is a speculative motive for holding cash?

Beauty Aids has an average collection period of 8.4 days and annual credit sales of $937,800.What is the average investment in accounts receivable as shown on the balance sheet? Assume a 365-day year.

Laurie's Ice Rink keeps an extra $1,000 in its checking account simply in case an emergency arises.Which type of motive for holding cash does this represent?

Which one of the following will tend to increase the length of the credit period?

You place an order for 1,800 units of widgets at a unit price of $14.99.The supplier offers terms of 2/10, net 30.If you don't take the discount, how much interest on your order are you paying implicitly?

Which of these is evidence of indebtedness?

PP&M sells earnings forecasts for international securities.Its credit terms are 1/5, net 20.Based on experience, 66 percent of all customers take the discount.What is the average collection period?

Used Furniture sells 1,330 sofas a year at an average price per sofa of $549.The carrying cost per unit is $31.60.The company orders 75 sofas at a time and has a fixed order cost of $69 per order.The sofas are sold out before they are restocked.What is the economic order quantity?

What is the key difference between an ordinary preferred stock and a money market preferred stock?

The economic order quantity approach states that inventory order sizes should be determined by:

During a normal month, Jim's Gems receives a total of nine checks with a total value of $97,500.On average, it takes 1 day from the date of deposit for the funds from these checks to be available to the firm.Assume each month has 30 days.What is the average daily float?

A disbursement account into which funds are transferred only as needed to cover the demands for payment is called a(n) ____ account.

On June 22, Roy's Welding Shop purchased $2,618 worth of goods.The terms of the sale were 2/15, net 45.What is the effective annual rate of interest for the credit period for this sale?

Which one of the following is a disbursement account into which funds are transferred from a master account only as the funds are needed to cover checks presented for payment?