Exam 21: Mergers, Acquisitions, and Corporate Control

A firm with unpredictable cash flows is trying to set upper and lower limits for cash balances.Which of the following factors will result in upper and lower limits being closer to each other?

At the end of each day, the balance in a zero-balance account will be:

How much value would be added to a firm that could permanently reduce its collection period by two days if daily collections average $10,000 and the opportunity cost is 5 percent annually?

Calculate EOQ given the following information:

Cheques that have been deposited may not be immediately available for use due to:

Short-term securities are safe to keep idle cash balance.Choose from the following, one appropriate reason for this.

A firm's safety stock represents the:

A manager estimates that her firm benefits from an average float time of six days.Which of the following is true if the firm averages $15,000 per day in payments?

What is the bank's ledger balance?

What is the economic order quantity for an automobile dealer selling 2,000 cars per year, at a cost of $750 per order, and a carrying cost of $300 per automobile?

Repos are long-term unsecured loan agreements.

How much time must be saved to justify a lock-box system that processes 350 cheques per day at an average amount of $400 per cheque if the system will cost $20,000 annually and interest rates average 8 percent?

A company gains as a result of payment float and loses as a result of availability float.

Remote disbursement is a payment system designed to:

The Quick Corp.has implemented procedures to cut 1.5 days from their cash collection process.Annual sales (all charge sales) are $30 million and the opportunity cost of funds is 9 percent.What is the value of the annual savings, and how much would the savings be worth if the speed-up in collections can be considered permanent?

Short-term securities have high interest-rate risk.

Calculate the payment float given the following information:

What is the payment float?

Your corporate financial manager has decided to liquidate securities to provide for cash needs in units of $50,000.Is that amount of cash consistent with annual cash needs of $2,500,000, costs per sale of $30, and annual T-bill rate of 6 percent?

What are some tactics to increase net float?