Question 1

Speculative motives for holding cash include holding funds to meet unexpected demands.

Accepted Answer

A) True 
 B)False

Question 2

In cash budgeting,the ________ seasonal and uncertain a firm's cash flows,the ________ the number of budgeting intervals it should use

Accepted Answer

A) more;greater 
B) more;fewer 
C) less;greater 
D) less;fewer 
A) more;greater 
B) more;fewer 
C) less;greater 
D) less;fewer

Question 3

Holding all other factors constant,if a firm increases its current liabilities relative to total assets,

Accepted Answer

A) it increases return and reduces risk. 
B) it increases return and increases risk. 
C) it reduces return and reduces risk. 
D) it reduces return and increases risk. 
E) none of above are correct 
A) it increases return and reduces risk. 
B) it increases return and increases risk. 
C) it reduces return and reduces risk. 
D) it reduces return and increases risk. 
E) none of above are correct

Question 4

The ________ is the time period that elapses from the point when the firm makes the outlay to purchase raw materials on account to the point when payment is made to the supplier of the goods.

Accepted Answer

A) cash conversion cycle 
B) operating cycle 
C) average age of inventory 
D) average collection period 
E) none of the above 
A) cash conversion cycle 
B) operating cycle 
C) average age of inventory 
D) average collection period 
E) none of the above

Question 5

Which of the following statements is most correct?

Accepted Answer

A) The financial crisis and recession of 2007-2009 had little effect on the ability of borrower firms to obtain short-term financing and for firms with surplus funds to invest in short-term instruments. 
B) The financial crisis and recession of 2007-2009 had no effect on the ability of borrower firms to obtain short-term financing and for firms with surplus funds to invest in short-term instruments. 
C) The financial crisis and recession of 2007-2009 had strong effects on the ability of borrower firms to obtain short-term financing but made it easy for firms with surplus funds to invest in short-term instruments. 
D) The financial crisis and recession of 2007-2009 had little effect on the ability of borrower firms to obtain short-term financing but made it easy for firms with surplus funds to invest in short-term instruments. 
E) none of the above 
A) The financial crisis and recession of 2007-2009 had little effect on the ability of borrower firms to obtain short-term financing and for firms with surplus funds to invest in short-term instruments. 
B) The financial crisis and recession of 2007-2009 had no effect on the ability of borrower firms to obtain short-term financing and for firms with surplus funds to invest in short-term instruments. 
C) The financial crisis and recession of 2007-2009 had strong effects on the ability of borrower firms to obtain short-term financing but made it easy for firms with surplus funds to invest in short-term instruments. 
D) The financial crisis and recession of 2007-2009 had little effect on the ability of borrower firms to obtain short-term financing but made it easy for firms with surplus funds to invest in short-term instruments. 
E) none of the above

Question 6

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

Accepted Answer

A) paying accounts payable as late as possible without damaging the firm's credit rating. 
B) turning over inventory as quickly as possible while avoiding stock outs. 
C) collecting accounts receivable as quickly as possible without damaging customer relationships. 
D) all of the above 
A) paying accounts payable as late as possible without damaging the firm's credit rating. 
B) turning over inventory as quickly as possible while avoiding stock outs. 
C) collecting accounts receivable as quickly as possible without damaging customer relationships. 
D) all of the above

Question 7

The goal of a company's cash management policy is to

Accepted Answer

A) increase the cash conversion cycle. 
B) increase the payment period. 
C) maximize the cash requirement. 
D) maximize cash outflows. 
E) none of above are correct 
A) increase the cash conversion cycle. 
B) increase the payment period. 
C) maximize the cash requirement. 
D) maximize cash outflows. 
E) none of above are correct

Question 8

The inventory conversion period is calculated by inventory divided by costs of goods sold.

Accepted Answer

A) True 
 B)False

Question 9

If the cash conversion cycle is shorter,then the firm's investment in inventories and receivables will be smaller.

Accepted Answer

A) True 
 B)False

Question 10

In general,the less net working capital a company has

Accepted Answer

A) the greater the risk. 
B) the lower the risk. 
C) the less likely creditors will lend to the firm. 
D) none of the above 
A) the greater the risk. 
B) the lower the risk. 
C) the less likely creditors will lend to the firm. 
D) none of the above

Question 11

Which of the following marketable securities is sold at a discount throughout competitive bidding in a weekly auction?

Accepted Answer

A) U.S.Treasury bills 
B) federal funds 
C) commercial paper 
D) negotiable certificates of deposit 
A) U.S.Treasury bills 
B) federal funds 
C) commercial paper 
D) negotiable certificates of deposit

Question 12

Which of the following cycles is not a component of the firm's short-term operating cycle?

Accepted Answer

A) inventory cycle 
B) accounts receivable cycle 
C) accounts payable cycle 
D) fixed asset cycle 
A) inventory cycle 
B) accounts receivable cycle 
C) accounts payable cycle 
D) fixed asset cycle

Question 13

If the average payment period is longer,then the cash conversion cycle will be longer.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) the firm's marketing effort. 
B) the firm's credit policies. 
C) how the firm manages its receivables 
D) All of the statements above are correct. 
A) the firm's marketing effort. 
B) the firm's credit policies. 
C) how the firm manages its receivables 
D) All of the statements above are correct.

Question 15

More efficient management of working capital assets will lessen the firm's needs for financing.

Accepted Answer

A) True 
 B)False

Question 16

The principle of hedging calls for the matching of a firm's average:

Accepted Answer

A) liquidity of its assets with its liabilities and equity 
B) liquidity of its accounts receivable with its accounts payable 
C) maturities of its assets with its liabilities and equity 
D) maturities of its sales with its assets 
A) liquidity of its assets with its liabilities and equity 
B) liquidity of its accounts receivable with its accounts payable 
C) maturities of its assets with its liabilities and equity 
D) maturities of its sales with its assets

Question 17

Theoretically,the transactions demand for cash could be reduced to zero.

Accepted Answer

A) True 
 B)False

Question 18

Holding all other factors constant,if a firm increases its current liabilities relative to total assets,

Accepted Answer

A) it increases return and reduces risk. 
B) it has no effect on return and increases risk. 
C) it reduces return and reduces risk. 
D) it reduces return and increases risk. 
E) none of above are correct 
A) it increases return and reduces risk. 
B) it has no effect on return and increases risk. 
C) it reduces return and reduces risk. 
D) it reduces return and increases risk. 
E) none of above are correct

Question 19

Which of the following is not considered to be one of the five C's of credit analysis?

Accepted Answer

A) character 
B) capacity 
C) capital 
D) collateral 
E) caution 
A) character 
B) capacity 
C) capital 
D) collateral 
E) caution

Question 20

When determining the short-term operating cycle,which of the following components reduce the length of the cycle?

Accepted Answer

A) increases in the inventory period 
B) increases in the accounts receivable period 
C) increases in the accounts payable period 
D) all of the above 
A) increases in the inventory period 
B) increases in the accounts receivable period 
C) increases in the accounts payable period 
D) all of the above

Speculative motives for holding cash include holding funds to meet unexpected demands.

In cash budgeting,the seasonal and uncertain a firm's cash flows,the the number of budgeting intervals it should use

Holding all other factors constant,if a firm increases its current liabilities relative to total assets,

The ________ is the time period that elapses from the point when the firm makes the outlay to purchase raw materials on account to the point when payment is made to the supplier of the goods.

Which of the following statements is most correct?

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

The goal of a company's cash management policy is to

The inventory conversion period is calculated by inventory divided by costs of goods sold.

If the cash conversion cycle is shorter,then the firm's investment in inventories and receivables will be smaller.

In general,the less net working capital a company has

Which of the following marketable securities is sold at a discount throughout competitive bidding in a weekly auction?

Which of the following cycles is not a component of the firm's short-term operating cycle?

If the average payment period is longer,then the cash conversion cycle will be longer.

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

More efficient management of working capital assets will lessen the firm's needs for financing.

The principle of hedging calls for the matching of a firm's average:

Theoretically,the transactions demand for cash could be reduced to zero.

Holding all other factors constant,if a firm increases its current liabilities relative to total assets,

Which of the following is not considered to be one of the five C's of credit analysis?

When determining the short-term operating cycle,which of the following components reduce the length of the cycle?

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Exam 15: Managing Working Capital

Speculative motives for holding cash include holding funds to meet unexpected demands.

In cash budgeting,the ________ seasonal and uncertain a firm's cash flows,the ________ the number of budgeting intervals it should use

Holding all other factors constant,if a firm increases its current liabilities relative to total assets,

The ________ is the time period that elapses from the point when the firm makes the outlay to purchase raw materials on account to the point when payment is made to the supplier of the goods.

Which of the following statements is most correct?

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

The goal of a company's cash management policy is to

The inventory conversion period is calculated by inventory divided by costs of goods sold.

If the cash conversion cycle is shorter,then the firm's investment in inventories and receivables will be smaller.

In general,the less net working capital a company has

Which of the following marketable securities is sold at a discount throughout competitive bidding in a weekly auction?

Which of the following cycles is not a component of the firm's short-term operating cycle?

If the average payment period is longer,then the cash conversion cycle will be longer.

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

More efficient management of working capital assets will lessen the firm's needs for financing.

The principle of hedging calls for the matching of a firm's average:

Theoretically,the transactions demand for cash could be reduced to zero.

Holding all other factors constant,if a firm increases its current liabilities relative to total assets,

Which of the following is not considered to be one of the five C's of credit analysis?

When determining the short-term operating cycle,which of the following components reduce the length of the cycle?

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

In cash budgeting,the seasonal and uncertain a firm's cash flows,the the number of budgeting intervals it should use