Question 1

Inventory / (COGS / 365).

Accepted Answer

A)  Inventory conversion period 
B)  Average collection period 
C)  Average payment period 
D)  Inventory turnover 
A)  Inventory conversion period 
B)  Average collection period 
C)  Average payment period 
D)  Inventory turnover

Question 2

A banker's acceptance is used to finance international trade, represents an unconditional obligation of an accepting bank, and has a yield that closely follows the yield on commercial paper.

Accepted Answer

A) True 
 B)False

Question 3

A firm with an inventory period of 100 days and an accounts receivable period of 50 days will have an operating cycle of 150 days.

Accepted Answer

A) True 
 B)False

Question 4

The operating cycle is the inventory conversion period plus the accounts receivable period.

Accepted Answer

A) True 
 B)False

Question 5

As sales increase over time, assets will increase at the same growth rate so long as the…

Accepted Answer

A)  asset turnover increases 
B)  asset turnover ratio remains constant 
C)  asset turnover ratio decreases 
D)  profit margin remains constant 
A)  asset turnover increases 
B)  asset turnover ratio remains constant 
C)  asset turnover ratio decreases 
D)  profit margin remains constant

Question 6

Both the operating cycle and the cash conversion cycle can be reduced by shortening the inventory period.

Accepted Answer

A) True 
 B)False

Question 7

Eurodollars are dollar deposits placed in foreign banks and converted to euros.

Accepted Answer

A) True 
 B)False

Question 8

A survey of financial managers found they spend nearly what percent of their time dealing with financial planning, budgeting, and working capital issues?

Accepted Answer

A)  10 percent 
B)  30 percent 
C)  50 percent 
D)  70 percent 
A)  10 percent 
B)  30 percent 
C)  50 percent 
D)  70 percent

Question 9

Commercial paper is the long-term, unsecured notes of well-known business firms, such as IBM or General Electric (GE).

Accepted Answer

A) True 
 B)False

Question 10

BP has a cash conversion cycle of 80 days, an average collection period of 25 days, and an average age of inventory of 50 days. Based on this information, BPs operating cycle is ________ days.

Accepted Answer

A)  5 
B)  75 
C)  105 
D)  130 
A)  5 
B)  75 
C)  105 
D)  130

Question 11

The cash conversion cycle measures the time between when a firm pays its suppliers for inventory and when it collects cash from customers on a sale of the finished product.

Accepted Answer

A) True 
 B)False

Question 12

If a firm's inventories on hand are $200,000 and its cost of goods sold is $600,000, what is the inventory turnover?

Accepted Answer

A)  2.0 times 
B)  3.0 times 
C)  4.0 times 
D)  6.0 times 
A)  2.0 times 
B)  3.0 times 
C)  4.0 times 
D)  6.0 times

Question 13

Current assets, typically, comprise about 80-90 percent of a firm's total assets.

Accepted Answer

A) True 
 B)False

Question 14

In a perfect world, a firm would prefer to have a

Accepted Answer

A)  positive operating cycle. 
B)  negative operating cycle. 
C)  positive cash conversion cycle. 
D)  negative cash conversion cycle. 
A)  positive operating cycle. 
B)  negative operating cycle. 
C)  positive cash conversion cycle. 
D)  negative cash conversion cycle.

Question 15

A mercantile credit bureau serves primarily as a (n):

Accepted Answer

A)  collection agency for delinquent accounts 
B)  common meeting place where credit managers may exchange information 
C)  organization through which accounts receivable may be sold to other businesses 
D)  central record-keeping organization for credit information on business 
A)  collection agency for delinquent accounts 
B)  common meeting place where credit managers may exchange information 
C)  organization through which accounts receivable may be sold to other businesses 
D)  central record-keeping organization for credit information on business

Question 16

Transactions motives for holding cash include holding funds to meet unexpected demands.

Accepted Answer

A) True 
 B)False

Question 17

Delays in processing incoming payments from customers by the receiving firm.

Accepted Answer

A)  Float 
B)  Transmission float 
C)  Processing float 
D)  Clearing float 
A)  Float 
B)  Transmission float 
C)  Processing float 
D)  Clearing float

Question 18

A (n) ________ in current liabilities ________ net working capital, thereby ________ the risk of technical insolvency.

Accepted Answer

A)  decrease; increases; increasing 
B)  decrease; decreases; reducing 
C)  increase; decreases; increasing 
D)  increase; increases; reducing 
A)  decrease; increases; increasing 
B)  decrease; decreases; reducing 
C)  increase; decreases; increasing 
D)  increase; increases; reducing

Question 19

A firm's excess cash balance during a particular month could be best deployed if it were

Accepted Answer

A)  financed with short term investments 
B)  financed with long term investments 
C)  invested in short term investments 
D)  invested in long term investments 
A)  financed with short term investments 
B)  financed with long term investments 
C)  invested in short term investments 
D)  invested in long term investments

Question 20

Accounts receivable / (Net sales / 365).

Accepted Answer

A)  Inventory conversion period 
B)  Average collection period 
C)  Average payment period 
D)  Inventory turnover 
A)  Inventory conversion period 
B)  Average collection period 
C)  Average payment period 
D)  Inventory turnover

Inventory / (COGS / 365).

A banker's acceptance is used to finance international trade, represents an unconditional obligation of an accepting bank, and has a yield that closely follows the yield on commercial paper.

A firm with an inventory period of 100 days and an accounts receivable period of 50 days will have an operating cycle of 150 days.

The operating cycle is the inventory conversion period plus the accounts receivable period.

As sales increase over time, assets will increase at the same growth rate so long as the…

Both the operating cycle and the cash conversion cycle can be reduced by shortening the inventory period.

Eurodollars are dollar deposits placed in foreign banks and converted to euros.

A survey of financial managers found they spend nearly what percent of their time dealing with financial planning, budgeting, and working capital issues?

Commercial paper is the long-term, unsecured notes of well-known business firms, such as IBM or General Electric (GE).

BP has a cash conversion cycle of 80 days, an average collection period of 25 days, and an average age of inventory of 50 days. Based on this information, BPs operating cycle is ________ days.

The cash conversion cycle measures the time between when a firm pays its suppliers for inventory and when it collects cash from customers on a sale of the finished product.

If a firm's inventories on hand are $200,000 and its cost of goods sold is $600,000, what is the inventory turnover?

Current assets, typically, comprise about 80-90 percent of a firm's total assets.

In a perfect world, a firm would prefer to have a

A mercantile credit bureau serves primarily as a (n):

Transactions motives for holding cash include holding funds to meet unexpected demands.

Delays in processing incoming payments from customers by the receiving firm.

A (n) in current liabilities net working capital, thereby the risk of technical insolvency.

A firm's excess cash balance during a particular month could be best deployed if it were

Accounts receivable / (Net sales / 365).

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuations

Securities and Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Exam 15: Managing Working Capital

Inventory / (COGS / 365).

A banker's acceptance is used to finance international trade, represents an unconditional obligation of an accepting bank, and has a yield that closely follows the yield on commercial paper.

A firm with an inventory period of 100 days and an accounts receivable period of 50 days will have an operating cycle of 150 days.

The operating cycle is the inventory conversion period plus the accounts receivable period.

As sales increase over time, assets will increase at the same growth rate so long as the…

Both the operating cycle and the cash conversion cycle can be reduced by shortening the inventory period.

Eurodollars are dollar deposits placed in foreign banks and converted to euros.

A survey of financial managers found they spend nearly what percent of their time dealing with financial planning, budgeting, and working capital issues?

Commercial paper is the long-term, unsecured notes of well-known business firms, such as IBM or General Electric (GE).

BP has a cash conversion cycle of 80 days, an average collection period of 25 days, and an average age of inventory of 50 days. Based on this information, BPs operating cycle is ________ days.

The cash conversion cycle measures the time between when a firm pays its suppliers for inventory and when it collects cash from customers on a sale of the finished product.

If a firm's inventories on hand are $200,000 and its cost of goods sold is $600,000, what is the inventory turnover?

Current assets, typically, comprise about 80-90 percent of a firm's total assets.

In a perfect world, a firm would prefer to have a

A mercantile credit bureau serves primarily as a (n):

Transactions motives for holding cash include holding funds to meet unexpected demands.

Delays in processing incoming payments from customers by the receiving firm.

A (n) ________ in current liabilities ________ net working capital, thereby ________ the risk of technical insolvency.

A firm's excess cash balance during a particular month could be best deployed if it were

Accounts receivable / (Net sales / 365).

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuations

Securities and Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

A (n) in current liabilities net working capital, thereby the risk of technical insolvency.