Question 1

Increases in the cash conversion cycle will lower the firm's short-term financing needs.

Accepted Answer

A) True 
 B)False

Question 2

By multiplying the average sales per day times the inventory conversion period,the inventories investment amount can be determined.

Accepted Answer

A) True 
 B)False

Question 3

___________ are short-term money market investments that are extremely safe and liquid;they can be quickly converted into cash at values very close to their intrinsic values.

Accepted Answer

A) preferred stocks. 
B) treasury bonds. 
C) corporate bonds. 
D) common stocks. 
E) none of above are correct 
A) preferred stocks. 
B) treasury bonds. 
C) corporate bonds. 
D) common stocks. 
E) none of above are correct

Question 4

Working capital does not include:

Accepted Answer

A) cash 
B) accounts receivable 
C) marketable securities 
D) property,plant,and equipment 
A) cash 
B) accounts receivable 
C) marketable securities 
D) property,plant,and equipment

Question 5

Because commercial paper rates are typically below U.S.Treasury bill rates,they are a valuable short-term financing source for high quality business firms.

Accepted Answer

A) True 
 B)False

Question 6

The time between when a payee sends payment and the funds are credited to the payer's bank account is called the:

Accepted Answer

A) collection float 
B) disbursement float 
C) total float 
D) transmittal float 
A) collection float 
B) disbursement float 
C) total float 
D) transmittal float

Question 7

The accounts payable period is the time between a firm pays its suppliers for inventory and collecting cash from inventories.

Accepted Answer

A) True 
 B)False

Question 8

A survey of financial managers found they spend nearly what percent of their time dealing with financial planning,budgeting,and working capital issues?

Accepted Answer

A) 10 percent 
B) 30 percent 
C) 50 percent 
D) 70 percent 
A) 10 percent 
B) 30 percent 
C) 50 percent 
D) 70 percent

Question 9

Activities that decrease the cash conversion cycle will increase the firm's need to obtain financing.

Accepted Answer

A) True 
 B)False

Question 10

A firm can reduce its cash conversion cycle by

Accepted Answer

A) increasing its average age of inventory 
B) increasing its average collection period 
C) decreasing its average payment period 
D) increasing its average payment period 
E) none of the above 
A) increasing its average age of inventory 
B) increasing its average collection period 
C) decreasing its average payment period 
D) increasing its average payment period 
E) none of the above

Question 11

If a firm has net sales of $400,000,annual cost of goods sold of $315,000,an inventory turnover of 4.5 times a year,and an accounts receivable turnover of five times a year,the combined investment in inventories and accounts receivable would be:

Accepted Answer

A) $64,500 
B) $92,000 
C) $122,500 
D) $150,000 
A) $64,500 
B) $92,000 
C) $122,500 
D) $150,000

Question 12

Which of the following is not an advantage of short-term borrowing?

Accepted Answer

A) flexibility 
B) establishing continuous relationships with a bank or financial institution 
C) frequent renewals 
D) lower cost 
A) flexibility 
B) establishing continuous relationships with a bank or financial institution 
C) frequent renewals 
D) lower cost

Question 13

Marketable securities may be held for speculative motives.

Accepted Answer

A) True 
 B)False

Question 14

The transactions motive is the demand for holding cash.

Accepted Answer

A) True 
 B)False

Question 15

BP has a cash conversion cycle of 80 days,an average collection period of 25 days,and an average age of inventory of 70 days.Based on this information,BPs operating cycle is ________ days.

Accepted Answer

A) 95 
B) 85 
C) 75 
D) 65 
E) none of the above 
A) 95 
B) 85 
C) 75 
D) 65 
E) none of the above

Question 16

U.S.Treasury bills are sold at a discount through competitive bidding in an annual auction.

Accepted Answer

A) True 
 B)False

Question 17

A financial manager should strive to maximize the investment in current assets.

Accepted Answer

A) True 
 B)False

Question 18

A firm with a cash conversion cycle of 200 days and an operating cycle of 120 days has an average payment period of:

Accepted Answer

A) 320 
B) 180 
C) 3 
D) cannot be determined from this information 
A) 320 
B) 180 
C) 3 
D) cannot be determined from this information

Question 19

Ningbo shipping has projected sales in May,June,and July of $100,$200,and $300,respectively.It makes 20 percent of sales for cash and collects the balance one month following the sale.Ningbo Shipping's total cash receipts in July are

Accepted Answer

A) $220 
B) $200 
C) $180 
D) cannot be determined 
A) $220 
B) $200 
C) $180 
D) cannot be determined

Question 20

Dun & Bradstreet serves as:

Accepted Answer

A) an agency for rating the bonds of businesses and governmental bodies 
B) the principal rating agency for commercial paper 
C) a research and advisory facility for stocks and bonds 
D) a general credit reporting agency covering all fields of business activity 
A) an agency for rating the bonds of businesses and governmental bodies 
B) the principal rating agency for commercial paper 
C) a research and advisory facility for stocks and bonds 
D) a general credit reporting agency covering all fields of business activity

Increases in the cash conversion cycle will lower the firm's short-term financing needs.

By multiplying the average sales per day times the inventory conversion period,the inventories investment amount can be determined.

___________ are short-term money market investments that are extremely safe and liquid;they can be quickly converted into cash at values very close to their intrinsic values.

Working capital does not include:

Because commercial paper rates are typically below U.S.Treasury bill rates,they are a valuable short-term financing source for high quality business firms.

The time between when a payee sends payment and the funds are credited to the payer's bank account is called the:

The accounts payable period is the time between a firm pays its suppliers for inventory and collecting cash from inventories.

A survey of financial managers found they spend nearly what percent of their time dealing with financial planning,budgeting,and working capital issues?

Activities that decrease the cash conversion cycle will increase the firm's need to obtain financing.

A firm can reduce its cash conversion cycle by

If a firm has net sales of $400,000,annual cost of goods sold of $315,000,an inventory turnover of 4.5 times a year,and an accounts receivable turnover of five times a year,the combined investment in inventories and accounts receivable would be:

Which of the following is not an advantage of short-term borrowing?

Marketable securities may be held for speculative motives.

The transactions motive is the demand for holding cash.

BP has a cash conversion cycle of 80 days,an average collection period of 25 days,and an average age of inventory of 70 days.Based on this information,BPs operating cycle is ________ days.

U.S.Treasury bills are sold at a discount through competitive bidding in an annual auction.

A financial manager should strive to maximize the investment in current assets.

A firm with a cash conversion cycle of 200 days and an operating cycle of 120 days has an average payment period of:

Ningbo shipping has projected sales in May,June,and July of $100,$200,and $300,respectively.It makes 20 percent of sales for cash and collects the balance one month following the sale.Ningbo Shipping's total cash receipts in July are

Dun & Bradstreet serves as:

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

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Exam 15: Managing Working Capital

Increases in the cash conversion cycle will lower the firm's short-term financing needs.

By multiplying the average sales per day times the inventory conversion period,the inventories investment amount can be determined.

___________ are short-term money market investments that are extremely safe and liquid;they can be quickly converted into cash at values very close to their intrinsic values.

Working capital does not include:

Because commercial paper rates are typically below U.S.Treasury bill rates,they are a valuable short-term financing source for high quality business firms.

The time between when a payee sends payment and the funds are credited to the payer's bank account is called the:

The accounts payable period is the time between a firm pays its suppliers for inventory and collecting cash from inventories.

A survey of financial managers found they spend nearly what percent of their time dealing with financial planning,budgeting,and working capital issues?

Activities that decrease the cash conversion cycle will increase the firm's need to obtain financing.

A firm can reduce its cash conversion cycle by

If a firm has net sales of $400,000,annual cost of goods sold of $315,000,an inventory turnover of 4.5 times a year,and an accounts receivable turnover of five times a year,the combined investment in inventories and accounts receivable would be:

Which of the following is not an advantage of short-term borrowing?

Marketable securities may be held for speculative motives.

The transactions motive is the demand for holding cash.

BP has a cash conversion cycle of 80 days,an average collection period of 25 days,and an average age of inventory of 70 days.Based on this information,BPs operating cycle is ________ days.

U.S.Treasury bills are sold at a discount through competitive bidding in an annual auction.

A financial manager should strive to maximize the investment in current assets.

A firm with a cash conversion cycle of 200 days and an operating cycle of 120 days has an average payment period of:

Ningbo shipping has projected sales in May,June,and July of $100,$200,and $300,respectively.It makes 20 percent of sales for cash and collects the balance one month following the sale.Ningbo Shipping's total cash receipts in July are

Dun & Bradstreet serves as:

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