Exam 15: Managing Working Capital

The basic strategies that should be employed by the business firm in managing cash include all of the following except

Securities issued by municipalities, such as cities, towns, states, and school districts, pay interest that, under law, is exempt from federal income taxes.

Which of the following statements is most correct?

In general, the less net working capital a company has

In general, the more net working capital a company has

The basic strategies that should be employed by the business firm in managing cash include all of the following except

A firm can reduce its cash conversion cycle by

Holding funds to meet unexpected demands.

To qualify as a marketable security, an investment must have a long maturity.

A system in which payments are sent to a P.O. box and processed by a bank to reduce collection float is called a lockbox system.

A firm with an inventory period of 30 days, an accounts receivable period of 30 days, and an accounts payable period of 90 days has an operating cycle of _____ days.

Assume a firm's production process requires an average of 80 days to go from raw materials to finished products and another 40 days before the finished goods are sold. If the accounts receivable cycle is 70 days and the accounts payable cycle is 80 days, what would the operating cycle be?

A level production plan has problems, such as idle plant and laid-off workers during slow sales months and production bottlenecks during busy times.

The willingness of a credit applicant to pay her or his bills is measured by:

The delay in transferring funds between payer and payee because of the banking system check-clearing processes.

Ithaca Iron has annual operating outlays of $3,800,000 and a cash conversion cycle of 50 days. If the firm currently pays 10 percent for negotiated financing and reduces its cash conversion cycle to 45 days, the annual savings is closest to

A negotiable CD is a marketable receipt issued by a bank in exchange for a deposit of funds.

The cash conversion cycle can be reduced by lengthening the accounts payable period.

The projections on a cash budget will reflect which of the following:

To construct a cash budget, two sets of information are needed: estimated cash inflows and estimated cash outflows.