Question 1

What is float and why can it be valuable?

Accepted Answer

The cash shown in the company ledger is

Question 2

What approximate value should a firm put on being able to permanently reduce the length of its collection period by one day if annual sales (all on credit)are $5,000,000 and the appropriate opportunity cost is 10 percent annually?

Accepted Answer

A)  $1,370 
B)  $15,068 
C)  $13,700 
D)  $50,000 
A)  $1,370 
B)  $15,068 
C)  $13,700 
D)  $50,000

Question 3

A common characteristic of money market instruments is their high degree of liquidity.

Accepted Answer

A) True 
 B)False

Question 4

Potential savings from a lockbox system will be reduced by:

Accepted Answer

A)  the additional processing time required. 
B)  the additional mailing time required. 
C)  local bank charges. 
D)  an increase in interest rates. 
A)  the additional processing time required. 
B)  the additional mailing time required. 
C)  local bank charges. 
D)  an increase in interest rates.

Question 5

Lockbox systems allow local banks to collect and process the firm's remittance from that area.

Accepted Answer

A) True 
 B)False

Question 6

In the Baumol model,increases in the T-bill rate suggest that:

Accepted Answer

A)  average cash balances should be increased. 
B)  average cash balances should be decreased. 
C)  the cost per sale of securities will increase. 
D)  fewer sales should be conducted each year. 
A)  average cash balances should be increased. 
B)  average cash balances should be decreased. 
C)  the cost per sale of securities will increase. 
D)  fewer sales should be conducted each year.

Question 7

A system by which firms assign their customers for collection purposes to regional banks that transfer funds to a central bank is known as:

Accepted Answer

A)  a lock-box system. 
B)  a zero-balance account. 
C)  a wire transfer. 
D)  concentration banking. 
A)  a lock-box system. 
B)  a zero-balance account. 
C)  a wire transfer. 
D)  concentration banking.

Question 8

Where do firms invest excess funds until they are needed to pay bills?

Accepted Answer

Firms can invest idle cash in the money

What is float and why can it be valuable?

What approximate value should a firm put on being able to permanently reduce the length of its collection period by one day if annual sales (all on credit)are $5,000,000 and the appropriate opportunity cost is 10 percent annually?

A common characteristic of money market instruments is their high degree of liquidity.

Potential savings from a lockbox system will be reduced by:

Lockbox systems allow local banks to collect and process the firm's remittance from that area.

In the Baumol model,increases in the T-bill rate suggest that:

A system by which firms assign their customers for collection purposes to regional banks that transfer funds to a central bank is known as:

Where do firms invest excess funds until they are needed to pay bills?

Goals and Governance of the Firm

Financial Markets and Institutions

Accounting and Finance

Measuring Corporate Performance

The Time Value of Money

Valuing Bonds

Valuing Stocks

Net Present Value and Other Investment Criteria

Using Discounted Cash Flow Analysis to Make Investment Decisions

Project Analysis

Introduction to Risk, Return, and the Opportunity Cost of Capital

Risk, Return, and Capital Budgeting

The Weighted-Average Cost of Capital and Company Valuation

Introduction to Corporate Financing and Governance

Venture Capital, IPOs, and Seasoned Offerings

Debt and Payout Policy

Leasing

Payout Policy

Long-Term Financial Planning

Short-Term Financial Planning

Credit Management and Collection

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Filters

Exam 21: Cash and Inventory Management

What is float and why can it be valuable?

What approximate value should a firm put on being able to permanently reduce the length of its collection period by one day if annual sales (all on credit)are $5,000,000 and the appropriate opportunity cost is 10 percent annually?

A common characteristic of money market instruments is their high degree of liquidity.

Potential savings from a lockbox system will be reduced by:

Lockbox systems allow local banks to collect and process the firm's remittance from that area.

In the Baumol model,increases in the T-bill rate suggest that:

A system by which firms assign their customers for collection purposes to regional banks that transfer funds to a central bank is known as:

Where do firms invest excess funds until they are needed to pay bills?

Goals and Governance of the Firm

Financial Markets and Institutions

Accounting and Finance

Measuring Corporate Performance

The Time Value of Money

Valuing Bonds

Valuing Stocks

Net Present Value and Other Investment Criteria

Using Discounted Cash Flow Analysis to Make Investment Decisions

Project Analysis

Introduction to Risk, Return, and the Opportunity Cost of Capital

Risk, Return, and Capital Budgeting

The Weighted-Average Cost of Capital and Company Valuation

Introduction to Corporate Financing and Governance

Venture Capital, IPOs, and Seasoned Offerings

Debt and Payout Policy

Leasing

Payout Policy

Long-Term Financial Planning

Short-Term Financial Planning

Credit Management and Collection

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Filters