Exam 14: Managing Short-Term Financing Liabilities

Which of the following types of inventory financing is generally used when the inventory put up as collateral is relatively low priced, fast moving, and difficult to identify individually?

The moderate approach to current asset financing is the least profitable but the safest of all the three approaches.

The following information relates to Lobo Corporation. Cash $20,000 Accounts receivable $50,000 Marketable securities $65,000 Notes payable $10,000 Accrued rent $5,000 Based on this information, the net working capital of the company is:

Which of the following is the correct expression for the payables deferral period?

All else equal, a firm that purchases raw materials on credit will experience:

Bravo Corporation recently issued 270-day commercial paper with a face value of $2,000,000 and a simple interest rate of 11 percent. The company paid a transaction fee equal to 0.4 percent of the issue, which was taken out of the issue amount before the company received any funds. Assuming there are 360 days in a year, what is the commercial paper's effective annual rate (rEAR)? (Round your answer to two decimal places.)

Which of the following types of short-term credits increases (decreases) automatically, or spontaneously, as a firm's operations expand (contract)?

The inventory turnover of Long Corporation is 16, and its closing inventory is $20,000. Assuming there are 360 days in a year, the company's inventory conversion period is:

The average cash conversion cycle of U.S. firms is more than twice the average cash conversion cycle of European firms.

Suppose a firm purchases goods on credit terms of 3/10, net 15, and the firm always takes discounts. The cost of using the funds for six days is:

Gale Corporation recently issued 270-day commercial paper with a face value of $100,000 and a simple interest rate of 11 percent per annum. Assuming there are 360 days in a year, what is the commercial paper's annual percentage rate (APR)? (Round your answer to two decimal places.)

The following information relates to Rodeo Corporation. Current assets $70,000 Current liabilities $52,500 Long-term assets $210,000 Long-term liabilities $140,000 Based on this information, the amount of the current assets financed by the long-term liabilities is:

BarLey Inc. recently borrowed $125,000 from its bank at a simple interest rate of 12 percent. The loan is for one year and, according to the loan agreement, the interest should be added to the amount borrowed and the total amount to be repaid in monthly installments. The loan's monthly payments are:

According to the conservative current asset financing policy, :

The cash conversion cycle refers to the:

Grant Technologies is planning to get a 210-day $300,000 simple interest loan from its bank with a quoted interest rate of 11 percent and a 20% compensating balance requirement. Assuming there are 360 days in a year and Grant currently holds no funds at the lending bank, what is the annual percentage rate (APR) of the loan? (Round your answer to two decimal places.)

The following information relates to Zync Corporation. Current assets $200,000 Current liabilities $150,000 Long-term assets $600,000 Long-term liabilities $400,000 Based on this information, the net working capital of the company is:

The average liquidity measure (for example, current ratio) was significantly greater for U.S. firms than for European firms.

The annual percentage rate incorporates interest compounding in the computation, but the effective annual rate does not. Both computations adjust the percentage cost per period so that it is stated on an annual basis.

Net working capital is equal to: