Exam 19: Short-Term Financial Planning

When a loan is secured by receivables,the firm assigns the receivables to the bank.If the firm fails to repay the loan,the bank can collect the receivables from the firm's customers and use the cash to pay off the debt.

An increase in short-term interest rates will increase the carrying costs of the firm.

The longer the firm's accounts payable period,the:

A firm can reduce the cash conversion cycle by selling fewer goods on credit.

A firm's inventory and accounts payable periods are 80 and 42 days,respectively.How long can the firm's receivables period be in order to have no longer than a 65-day cash conversion cycle?

The cost of issuing commercial paper is generally lower than that of a line of credit.

How high can accounts receivable be allowed to grow before the firm's receivables period exceeds 50 days if annual sales equal $5 million and the cash conversion cycle equals 75 days?

Managers are alerted to projected cash shortages by way of the:

The goal of managing working capital,such as inventory,should be to minimize the:

A credit card company charges its customers an annual interest of 21.0% on the outstanding monthly balance.The effective annual rate for the customer will be:

Once the firm has sold its receivables,the factor bears all the responsibility for collecting on the account.

What happens to a firm whose uses of cash exceed its sources of cash during an accounting period?

What was the sales volume in the current quarter if beginning accounts receivable,at $5,000,was $1,000 higher than ending,and $20,000 was collected?

What is the inventory period for a firm with an annual cost of goods sold of $8 million,$1.5 million in inventory,and a cash conversion cycle of 75 days?

Which of the following would not be considered a use of cash?

Create the statement of sources and uses of cash from the following entries:

Banks will not usually lend the full value of the assets that are used as security.The safety margin is likely to be even larger in the case of loans that are secured by inventory.

When product demand is high,firms following a "middle of the road policy" for long- versus short-term financing will:

When financial managers take action to minimize the carrying costs of current assets,they:

When a firm finances long-term assets with short-term sources of funding,it: