Exam 18: Working Capital Management

The advantages to unbundling of cash flows from a subsidiary to a parent include all of the following EXCEPT:

Use the information to answer the following question(s). SureDrip Irrigation Systems Inc. is supplied with plastic chips for their plastic injection molding manufacturing process. Their supplier, Sun Chemical, Inc. offers financing terms of a 2% discount if the accounts payable are paid in 10 days or less with the full balance due in 45 days. Short-term financing available to SureDrip is available at an annual rate of 9.6%. SureDrip has just purchased $400,000 of plastic chips from Sun Chemical. -Refer to Table 18.1.NWC currently makes up what percentage of total firm value for Polaris?

Other things equal,managers prefer a lower "days working capital" to a higher one.

Which of the following payments to the parent company is NOT considered a before-tax cash flow payment in the host country?

Which of the following would most likely NOT be considered an after-tax cost in the host country when unbundling cash flows from a subsidiary to a foreign parent?

A centralized depository benefits the firm primarily by

The MNE enjoys a much greater choice of banking sources to fund its working capital needs than do domestic firms.Banking sources available to MNEs include in-house banks funded by unrepatriated capital,international banks,and local banks where subsidiaries are located.Describe how an in-house bank works to finance working capital needs.

Use the information to answer the following question(s). SureDrip Irrigation Systems Inc. is supplied with plastic chips for their plastic injection molding manufacturing process. Their supplier, Sun Chemical, Inc. offers financing terms of a 2% discount if the accounts payable are paid in 10 days or less with the full balance due in 45 days. Short-term financing available to SureDrip is available at an annual rate of 9.6%. SureDrip has just purchased $400,000 of plastic chips from Sun Chemical. -Refer to Instruction 18.1.What is the amount of money SureDrip will save on accounts payable if they accept the discount?

The Europeans have a popular liquid discountable bill originating with the Code Napoleon and backed by accounts receivable called

Which of the following actions will result in an increase in NWC?

Even though dividends are cash payments,firms typically must consider both cash flow and net income when making dividend distribution decisions.

Increases to cash flows can be anticipated if which of the following occurs?

In principle,the firm tries to minimize its NWC balance.

Identify and explain the five parts of a operating cycle as suggested by the authors.

________ is the process that cancels via offset all,or part,of the debt owed by one entity to another related entity.

Other things equal,a firm would rather have ________ in a depreciating currency,and ________ in an appreciating currency.

Firms might be tempted to order ________ inventory from foreign sources if they thought the foreign currency was about to be ________.

________ are compensation for the use of intellectual property belonging to some other party.

In a two-country,two-currency international operation,an affiliate in country "A" needing more of its own currency can

Firms whose currency is prime for devaluation may choose to purchase extra inventory from foreign sources before the devaluation occurs.Which of the following is NOT a potential problem associated with such a practice?