Question 1

The account receivable period may be calculated as accounts receivable divided by sales.

Accepted Answer

A) True 
 B)False

Question 2

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 3

A banker's acceptance is used to finance international trade,represents an unconditional obligation of an accepting bank,and has a yield that closely follows the yield on commercial paper.

Accepted Answer

A) True 
 B)False

Question 4

Deposits placed in foreign banks that remain denominated in U.S.dollars are called:

Accepted Answer

A) bankers' acceptances 
B) Eurodollars 
C) federal funds 
D) commercial paper 
A) bankers' acceptances 
B) Eurodollars 
C) federal funds 
D) commercial paper

Question 5

The cash conversion cycle can be reduced by lengthening the accounts payable period.

Accepted Answer

A) True 
 B)False

Question 6

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) minimize 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) minimize the cash requirement. 
D) maximize cash outflows. 
E) none of above are correct

Question 7

Which one of the following activities is not a major component of the short-term cash operating cycle?

Accepted Answer

A) manufacturing process 
B) selling effort 
C) collection period 
D) asset investment decisions 
A) manufacturing process 
B) selling effort 
C) collection period 
D) asset investment decisions

Question 8

Precautionary motives for holding cash include holding funds to take advantage of unusual cash discounts for needed materials.

Accepted Answer

A) True 
 B)False

Question 9

A firm with an inventory period of 30 days,an accounts receivable period of 30 days,and an accounts payable period of 90 days has a cash conversion cycle of _____ days.

Accepted Answer

A) 150 
B) -60 
C) 30 
D) -30 
A) 150 
B) -60 
C) 30 
D) -30

Question 10

All of the following statements is correct EXCEPT

Accepted Answer

A) The financial crisis and recession of 2007-2009 had strong effects on the ability of borrower firms to obtain short-term financing and for firms with surplus funds to invest in short-term instruments. 
B) During the 2007-2009 financial crisis and recession,major spikes in the risk premium between commercial paper and T-bills indicate major stresses to the financial system-both for issuers and investors. 
C) During the 2007-2009 financial crisis and recession,major spikes in the risk premium between commercial paper and T-bills indicate periods of investors fleeing investments of perceived risk (commercial paper)and placing funds in the safest assets (T-Bills). 
D) During the 2007-2009 financial crisis and recession,major spikes in the risk premium between commercial paper and T-bills indicate periods of investors fleeing investments of perceived risk (T-Bills)and placing funds in the safest assets (corporate bonds). 
E) all of the above are correct 
A) The financial crisis and recession of 2007-2009 had strong effects on the ability of borrower firms to obtain short-term financing and for firms with surplus funds to invest in short-term instruments. 
B) During the 2007-2009 financial crisis and recession,major spikes in the risk premium between commercial paper and T-bills indicate major stresses to the financial system-both for issuers and investors. 
C) During the 2007-2009 financial crisis and recession,major spikes in the risk premium between commercial paper and T-bills indicate periods of investors fleeing investments of perceived risk (commercial paper)and placing funds in the safest assets (T-Bills). 
D) During the 2007-2009 financial crisis and recession,major spikes in the risk premium between commercial paper and T-bills indicate periods of investors fleeing investments of perceived risk (T-Bills)and placing funds in the safest assets (corporate bonds). 
E) all of the above are correct

Question 11

The time it takes between when materials are ordered and cash is collected from receivables is referred to as the:

Accepted Answer

A) operating cycle 
B) cash conversion cycle 
C) assets turnover cycle 
D) sales or revenues cycle 
A) operating cycle 
B) cash conversion cycle 
C) assets turnover cycle 
D) sales or revenues cycle

Question 12

Assume a firm's production process requires an average of 80 days to go from raw materials to finished products and another 40 days before the finished goods are sold.If the accounts receivable cycle is 70 days and the accounts payable cycle is 80 days,what would the short-term operating cycle be?

Accepted Answer

A) 110 days 
B) 130 days 
C) 190 days 
D) 270 days 
A) 110 days 
B) 130 days 
C) 190 days 
D) 270 days

Question 13

The time between ordering materials and collecting cash from receivables is known as the:

Accepted Answer

A) operating cycle 
B) cash conversion cycle 
C) accounts receivable period 
D) none of the above 
A) operating cycle 
B) cash conversion cycle 
C) accounts receivable period 
D) none of the above

Question 14

The portion of current assets financed through long-term financing is referred to as the:

Accepted Answer

A) net working capital 
B) current ratio 
C) seasonal current assets 
D) fixed assets 
A) net working capital 
B) current ratio 
C) seasonal current assets 
D) fixed assets

Question 15

The willingness of a credit applicant to pay her or his bills is measured by:

Accepted Answer

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

Question 16

BP has an average age of inventory of 60 days,an average collection period of 45 days,and an average payment period of 30 days.Based on this information,BPs cash conversion cycle is ________ days.

Accepted Answer

A) 55 
B) 65 
C) 75 
D) 85 
E) none of the above 
A) 55 
B) 65 
C) 75 
D) 85 
E) none of the above

Question 17

Examples of regular cash outflows would not include:

Accepted Answer

A) materials purchases 
B) rent 
C) utility bills 
D) all the above are regular cash outflows 
A) materials purchases 
B) rent 
C) utility bills 
D) all the above are regular cash outflows

Question 18

A cash budget is a tool the treasurer uses to forecast future cash flows and estimate future short-term borrowing needs.

Accepted Answer

A) True 
 B)False

Question 19

The account receivable period may be calculated as accounts receivable divided by daily sales.

Accepted Answer

A) True 
 B)False

Question 20

If a firm's inventories on hand are $200,000 and its cost of goods sold is $600,000,what is the inventory turnover?

Accepted Answer

A) 2 times 
B) 3 times 
C) 4 times 
D) 5 times 
A) 2 times 
B) 3 times 
C) 4 times 
D) 5 times

The account receivable period may be calculated as accounts receivable divided by sales.

In general,the less net working capital a company has

A banker's acceptance is used to finance international trade,represents an unconditional obligation of an accepting bank,and has a yield that closely follows the yield on commercial paper.

Deposits placed in foreign banks that remain denominated in U.S.dollars are called:

The cash conversion cycle can be reduced by lengthening the accounts payable period.

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

Which one of the following activities is not a major component of the short-term cash operating cycle?

Precautionary motives for holding cash include holding funds to take advantage of unusual cash discounts for needed materials.

A firm with an inventory period of 30 days,an accounts receivable period of 30 days,and an accounts payable period of 90 days has a cash conversion cycle of _____ days.

All of the following statements is correct EXCEPT

The time it takes between when materials are ordered and cash is collected from receivables is referred to as the:

Assume a firm's production process requires an average of 80 days to go from raw materials to finished products and another 40 days before the finished goods are sold.If the accounts receivable cycle is 70 days and the accounts payable cycle is 80 days,what would the short-term operating cycle be?

The time between ordering materials and collecting cash from receivables is known as the:

The portion of current assets financed through long-term financing is referred to as the:

The willingness of a credit applicant to pay her or his bills is measured by:

BP has an average age of inventory of 60 days,an average collection period of 45 days,and an average payment period of 30 days.Based on this information,BPs cash conversion cycle is ________ days.

Examples of regular cash outflows would not include:

A cash budget is a tool the treasurer uses to forecast future cash flows and estimate future short-term borrowing needs.

The account receivable period may be calculated as accounts receivable divided by daily sales.

If a firm's inventories on hand are $200,000 and its cost of goods sold is $600,000,what is the inventory turnover?

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

The account receivable period may be calculated as accounts receivable divided by sales.

In general,the less net working capital a company has

A banker's acceptance is used to finance international trade,represents an unconditional obligation of an accepting bank,and has a yield that closely follows the yield on commercial paper.

Deposits placed in foreign banks that remain denominated in U.S.dollars are called:

The cash conversion cycle can be reduced by lengthening the accounts payable period.

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

Which one of the following activities is not a major component of the short-term cash operating cycle?

Precautionary motives for holding cash include holding funds to take advantage of unusual cash discounts for needed materials.

A firm with an inventory period of 30 days,an accounts receivable period of 30 days,and an accounts payable period of 90 days has a cash conversion cycle of _____ days.

All of the following statements is correct EXCEPT

The time it takes between when materials are ordered and cash is collected from receivables is referred to as the:

Assume a firm's production process requires an average of 80 days to go from raw materials to finished products and another 40 days before the finished goods are sold.If the accounts receivable cycle is 70 days and the accounts payable cycle is 80 days,what would the short-term operating cycle be?

The time between ordering materials and collecting cash from receivables is known as the:

The portion of current assets financed through long-term financing is referred to as the:

The willingness of a credit applicant to pay her or his bills is measured by:

BP has an average age of inventory of 60 days,an average collection period of 45 days,and an average payment period of 30 days.Based on this information,BPs cash conversion cycle is ________ days.

Examples of regular cash outflows would not include:

A cash budget is a tool the treasurer uses to forecast future cash flows and estimate future short-term borrowing needs.

The account receivable period may be calculated as accounts receivable divided by daily sales.

If a firm's inventories on hand are $200,000 and its cost of goods sold is $600,000,what is the inventory turnover?

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