Question 1

To construct a cash budget,two sets of information are needed: estimated cash inflows and estimated cash outflows.

Accepted Answer

A) True 
 B)False

Question 2

The estimated cash inflows are affected by the sales forecast and customer payment patterns.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is false?

Accepted Answer

A) the cash conversion cycle is the time between when the firm pays its suppliers and when it collects money from its customers. 
B) Because commercial paper rates are typically below the U.S.Treasury bill rates,commercial paper is a valuable short-term financing source for high quality business firms. 
C) More efficient management of working capital assets will lessen the firm's need to obtain financing. 
D) All of the statements above are correct. 
A) the cash conversion cycle is the time between when the firm pays its suppliers and when it collects money from its customers. 
B) Because commercial paper rates are typically below the U.S.Treasury bill rates,commercial paper is a valuable short-term financing source for high quality business firms. 
C) More efficient management of working capital assets will lessen the firm's need to obtain financing. 
D) All of the statements above are correct.

Question 4

If a firm has an operating cycle of 120 days and an average payment period of 20 days,its cash conversion cycle would be:

Accepted Answer

A) 100 days 
B) 140 days 
C) 18 days 
D) cannot be determined from this information 
A) 100 days 
B) 140 days 
C) 18 days 
D) cannot be determined from this information

Question 5

Calculation of a firm's average collection period is the same as calculating the:

Accepted Answer

A) accounts receivable cycle 
B) inventory cycle 
C) accounts payable cycle 
D) short-term operating cycle 
A) accounts receivable cycle 
B) inventory cycle 
C) accounts payable cycle 
D) short-term operating cycle

Question 6

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

Accepted Answer

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

Question 7

The key input to the short-run financial planning process is easiest to estimate is

Accepted Answer

A) cash sales. 
B) cash receipts. 
C) cash disbursements. 
D) the amount of month to month short term borrowing. 
A) cash sales. 
B) cash receipts. 
C) cash disbursements. 
D) the amount of month to month short term borrowing.

Question 8

In June,Erie Plastics had an ending cash balance of $55,000.In July,the firm had total cash receipts of $70,000 and total cash disbursements of $10,000.The minimum cash balance required by the firm is $25,000.At the end of July,Erie Plastics had

Accepted Answer

A) an excess cash balance of $25,000 
B) An excess cash balance of $0 
C) required financing of $10,000 
D) required financing of $25,000 
E) none of the above 
A) an excess cash balance of $25,000 
B) An excess cash balance of $0 
C) required financing of $10,000 
D) required financing of $25,000 
E) none of the above

Question 9

A firm with an inventory period of 100 days and an accounts receivable period of 50 days will have an operating cycle of 150 days.

Accepted Answer

A) True 
 B)False

Question 10

Reasons to invest in marketable securities would not include:

Accepted Answer

A) transactions motives 
B) precautionary motives 
C) speculative motives 
D) all the above are reasons to invest in marketable securities 
E) none of the above 
A) transactions motives 
B) precautionary motives 
C) speculative motives 
D) all the above are reasons to invest in marketable securities 
E) none of the above

Question 11

In the cash budget,the firm's final sales forecast us usually a function of

Accepted Answer

A) economic forecasts. 
B) the sales force estimate of demand. 
C) external and internal factors in combination. 
D) accounts payable experience. 
A) economic forecasts. 
B) the sales force estimate of demand. 
C) external and internal factors in combination. 
D) accounts payable experience.

Question 12

In general,the more 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

To construct a cash budget,two sets of information are needed: estimated cash inflows and estimated cash outflows.

The estimated cash inflows are affected by the sales forecast and customer payment patterns.

Which of the following statements is false?

If a firm has an operating cycle of 120 days and an average payment period of 20 days,its cash conversion cycle would be:

Calculation of a firm's average collection period is the same as calculating the:

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

The key input to the short-run financial planning process is easiest to estimate is

In June,Erie Plastics had an ending cash balance of $55,000.In July,the firm had total cash receipts of $70,000 and total cash disbursements of $10,000.The minimum cash balance required by the firm is $25,000.At the end of July,Erie Plastics had

A firm with an inventory period of 100 days and an accounts receivable period of 50 days will have an operating cycle of 150 days.

Reasons to invest in marketable securities would not include:

In the cash budget,the firm's final sales forecast us usually a function of

In general,the more net working capital a company has

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

To construct a cash budget,two sets of information are needed: estimated cash inflows and estimated cash outflows.

The estimated cash inflows are affected by the sales forecast and customer payment patterns.

Which of the following statements is false?

If a firm has an operating cycle of 120 days and an average payment period of 20 days,its cash conversion cycle would be:

Calculation of a firm's average collection period is the same as calculating the:

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

The key input to the short-run financial planning process is easiest to estimate is

In June,Erie Plastics had an ending cash balance of $55,000.In July,the firm had total cash receipts of $70,000 and total cash disbursements of $10,000.The minimum cash balance required by the firm is $25,000.At the end of July,Erie Plastics had

A firm with an inventory period of 100 days and an accounts receivable period of 50 days will have an operating cycle of 150 days.

Reasons to invest in marketable securities would not include:

In the cash budget,the firm's final sales forecast us usually a function of

In general,the more net working capital a company has

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