Question 1

The maturity matching approach to current asset financing uses long-term funds to finance all permanent asset requirements.

Accepted Answer

A) True 
 B)False

Question 2

The following information relates to Gear Corporation:

Inventory conversion period                  68.2 days              
Receivables collection period                35.8 days              
Payables deferral period                        24.6 days

Which of the following is the cash conversion cycle of the company?

Accepted Answer

A) 128.6 days 
B) 79.4 days 
C) 57.0 days 
D) 79.2 days 
E) 60.4 days 
A) 128.6 days 
B) 79.4 days 
C) 57.0 days 
D) 79.2 days 
E) 60.4 days

Question 3

The outright sale of receivables by firms to financial organizations is called factoring.

Accepted Answer

A) True 
 B)False

Question 4

The following information relates to Zync Corporation:
$\begin{array}{ll}
\text { Current assets } & \$ 200,000 \
\text { Current liabilities } & \$ 150,000 \
\text { Long-term assets } & \$ 600,000 \
\text { Long-term liabilities } & \$ 400,000
\end{array}$
Based on the information given above, the net working capital of the company is:

Accepted Answer

A) $250,000. 
B) $50,000. 
C) $350,000. 
D) $10,000,000. 
E) $650,000. 
A) $250,000. 
B) $50,000. 
C) $350,000. 
D) $10,000,000. 
E) $650,000.

Question 5

The three main working capital strategies-aggressive, conservative, and moderate-differ primarily in the:

Accepted Answer

A) relative amounts of short-term debt a firm uses. 
B) minimum level of permanent current assets a firm maintains. 
C) relative amount of long-term debt versus equity that a firm uses to finance its permanent current assets. 
D) average level of temporary current assets a firm maintains. 
E) amount of trade credit a firm uses. 
A) relative amounts of short-term debt a firm uses. 
B) minimum level of permanent current assets a firm maintains. 
C) relative amount of long-term debt versus equity that a firm uses to finance its permanent current assets. 
D) average level of temporary current assets a firm maintains. 
E) amount of trade credit a firm uses.

Question 6

Accruals are generally considered free debt in the sense that no explicit interest is paid on funds "raised" through them.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following sources of financing is considered spontaneous because it fluctuates naturally with changes in ordinary business operations/transactions without management making formal decisions?

Accepted Answer

A) Commercial paper 
B) Long-term bond 
C) Notes payable 
D) Trade credit 
E) Equity 
A) Commercial paper 
B) Long-term bond 
C) Notes payable 
D) Trade credit 
E) Equity

Question 8

The cash conversion cycle refers to the:

Accepted Answer

A) length of time from the payment for the purchase of raw materials to manufacture a product until the collection of accounts receivable associated with the sale of the product. 
B) average length of time between the cash payment for the purchase of raw materials and labor and their utilization in the manufacturing process. 
C) amount of time a product remains in inventory in various stages of completion. 
D) amount of time it takes to collect cash following a sale. 
E) length of time from the purchase of raw materials to manufacture a product until the payment for the raw materials is made. 
A) length of time from the payment for the purchase of raw materials to manufacture a product until the collection of accounts receivable associated with the sale of the product. 
B) average length of time between the cash payment for the purchase of raw materials and labor and their utilization in the manufacturing process. 
C) amount of time a product remains in inventory in various stages of completion. 
D) amount of time it takes to collect cash following a sale. 
E) length of time from the purchase of raw materials to manufacture a product until the payment for the raw materials is made.

The maturity matching approach to current asset financing uses long-term funds to finance all permanent asset requirements.

The following information relates to Gear Corporation: Inventory conversion period 68.2 days Receivables collection period 35.8 days Payables deferral period 24.6 days Which of the following is the cash conversion cycle of the company?

The outright sale of receivables by firms to financial organizations is called factoring.

The following information relates to Zync Corporation: Current assets \ 200,000 Current liabilities \ 150,000 Long-term assets \ 600,000 Long-term liabilities \ 400,000 Based on the information given above, the net working capital of the company is:

The three main working capital strategies-aggressive, conservative, and moderate-differ primarily in the:

Accruals are generally considered free debt in the sense that no explicit interest is paid on funds "raised" through them.

Which of the following sources of financing is considered spontaneous because it fluctuates naturally with changes in ordinary business operations/transactions without management making formal decisions?

The cash conversion cycle refers to the:

An Overview of Managerial Finance

Analysis of Financial Statements

The Financial Environment: Markets, Institutions, and Investment Banking

Time Value of Money

The Cost of Money Interest Rates

Bonds Debt Characteristics and Valuation

Stocks Equity Characteristics and Valuation

Risk and Rates of Return

Capital Budgeting Techniques

Project Cash Flows and Risk

The Cost of Capital

Capital Structure

Distribution of Retained Earnings: Dividends and Stock Repurchases

Managing Short-Term Assets

Financial Planning and Control

Filters

Exam 14: Managing Short-Term Financing Liabilities

The maturity matching approach to current asset financing uses long-term funds to finance all permanent asset requirements.

The following information relates to Gear Corporation: Inventory conversion period 68.2 days Receivables collection period 35.8 days Payables deferral period 24.6 days Which of the following is the cash conversion cycle of the company?

The outright sale of receivables by firms to financial organizations is called factoring.

The following information relates to Zync Corporation: Current assets \ 200,000 Current liabilities \ 150,000 Long-term assets \ 600,000 Long-term liabilities \ 400,000 Based on the information given above, the net working capital of the company is:

The three main working capital strategies-aggressive, conservative, and moderate-differ primarily in the:

Accruals are generally considered free debt in the sense that no explicit interest is paid on funds "raised" through them.

Which of the following sources of financing is considered spontaneous because it fluctuates naturally with changes in ordinary business operations/transactions without management making formal decisions?

The cash conversion cycle refers to the:

An Overview of Managerial Finance

Analysis of Financial Statements

The Financial Environment: Markets, Institutions, and Investment Banking

Time Value of Money

The Cost of Money Interest Rates

Bonds Debt Characteristics and Valuation

Stocks Equity Characteristics and Valuation

Risk and Rates of Return

Capital Budgeting Techniques

Project Cash Flows and Risk

The Cost of Capital

Capital Structure

Distribution of Retained Earnings: Dividends and Stock Repurchases

Managing Short-Term Assets

Financial Planning and Control

Filters