Exam 16: Working Capital Management

When pledging accounts receivables, which of the following statements is/are correct? I.Pledging requires permission of the SEC. II.In pledging accounts receivables, the firm loses title to the receivables and they are no longer listed on the balance sheet.

Fluctuating current assets are those assets that are affected by:

When the level of working capital is increased, all of the following are expected to occur except

Runners Ink, Inc.had sales last year of $700,000 and 35 percent of its sales are for cash, with the remainder buying on terms of net 30 days.If the receivables conversion period is actually 38 days, what is Runners Ink's accounts receivable?

In considering factoring accounts receivable, which of the following statements is/are correct? I.Maturity factoring occurs when the firm receives payment at the normal collection or due date of the factored accounts. II.Advance factoring occurs when the firm receives payment in prior to the normal collection or due date of the factored accounts.

Linear Technology had sales (all on credit) of $36 million and a gross profit margin of 30% last year.If Linear Technology's inventory averaged $3.9 million, and its accounts receivable were $5.0 million, what was the length of its operating cycle?

A firm's working capital position is important since::

Explain how a firm uses commercial paper as a short-term financing source and explain the disadvantage of using this form of financing.

The operating cycle begins with the and ends with the .

What is "stretching accounts payable" and what are the advantages and disadvantages of doing it?

Working capital policy involves day-to-day decisions that determine all of the following EXCEPT:

All other things being equal, a policy of financing its assets with a relatively proportion of short-term debt will tend to the variability (or risk) of the after-tax earnings of the firm.

A firm's working capital position is important from an internal and external standpoint.Which of the following apply:

Name some factors that affect the firm's investment decision to invest in current assets.

Under a conservative approach to working capital management, a firm tends to hold a relatively proportion of its total assets in the form of current assets.

The firm's receivables conversion period (measured in days) is equal to its accounts receivable divided by its .

Lenders normally feel that the relative risk associated with short-term debt is the risk associated with long- term debt.

Efficient current assets management refers to the firm’s ability to economize on which of the following? I.Inventory II.Marketable securities

Commercial paper is:

Gates Industries balance sheet and income statement for the year ending December 31, 1978 are as follows: Determine the length of the firm’s cash conversion cycle.