Exam 15: Managing Short-Term Assets

Other things equal, the days sales outstanding (DSO) of Firm A is 20 days and the days sales outstanding (DSO) of Firm B is 30 days. Which of the following statements about the firms is correct?

The "red-line method" refers to:

Which of the following statements is true about the cash management of multinational companies?

Jumpdisk Company writes checks averaging $15,000 a day, and it takes 5 days for these checks to clear. The firm also receives checks in the amount of $17,000 per day, but the firm loses three days while its receipts are being deposited and cleared. The firm's net float in dollars is:

Which of the following current asset investment policies emphasizes holding minimal current assets.

Which of the following statements is true about multinational working capital management?

A minimum checking account balance that a firm must maintain with a bank to help offset the costs and services such as check clearing and cash management advice is called a _____ balance.

If the average days of collection according to the aging schedule decrease from the first quarter of the year to the second quarter, then your firm's credit policy has tightened.

Concentration banking is one way for a firm to speed up the receipt of payments from customers.

The Danser Company expects to have sales of $30,000 in January, $33,000 in February, and $38,000 in March. If 20 percent of sales are for cash, 40 percent are credit sales paid in the month following the sale, and 40 percent are credit sales paid 2 months following the sale, the cash receipts from the sales in March are:

The process of evaluating the credit policy to determine whether a shift in the customers' payment patterns has occurred is called _____.

Reston Inc. has expected sales of $17,000,000. While 10 percent of its customers pay cash, the remaining 90 percent pay on credit with 40 percent paying on Day 10, 30 percent paying on Day 20, 15 percent paying on Day 25, and 15 percent paying on Day 30. Which of the following is Reston's days sales outstanding (DSO)?

The amount of checks that have been received and deposited but have not yet been made available to the account in which they were deposited is the _____ float.

A firm that offers payment terms of 2/10 net 30 gives its customers:

Orangetree Pharma's demand for test tubes is 72,000 units. If the lead time for placing an order is 5 days, then an order should be placed at an inventory level of: (Assume 360 days in a year)

Chovita Marbles' purchases for next month's sales are constant each month at $1,500. Other payments for wages, rent, and taxes are constant at $700 per month. Chovita's total cash disbursements for a month is _____.

Fashion Clothier's economic order quantity (EOQ) for dyes is 14,000 units. If the total demand is 196,000 units per period, carrying cost per unit is 25% of inventory value, purchase price is $10, and fixed costs per order is $30, then the total inventory cost is_____.

A firm's collection policy refers to the procedures followed by a firm to collect its accounts receivable.

From the information given below, the economic order quantity (EOQ) for Shinebird Textiles is _____. Ordering cost = $10 per order Carrying cost = 20% of purchase price Purchase price = $10 per unit Total sales for year = 1,000 units

Which of the following statements is correct about cash management systems?