Question 1

An increase in which one of the following is an indicator that an accounts receivable policy is becoming more restrictive?

Accepted Answer

A) bad debts 
B) accounts receivable turnover rate 
C) accounts receivable period 
D) credit sales 
E) operating cycle 
A) bad debts 
B) accounts receivable turnover rate 
C) accounts receivable period 
D) credit sales 
E) operating cycle

Question 2

A national firm has sales of $729,000 and cost of goods sold of $478,000.At the beginning of the year,the inventory was $37,000.At the end of the year,the inventory balance was $41,000.What is the inventory turnover rate?

Accepted Answer

A) 12.26 times 
B) 12.78 times 
C) 14.22 times 
D) 18.56 times 
E) 19.70 times 
A) 12.26 times 
B) 12.78 times 
C) 14.22 times 
D) 18.56 times 
E) 19.70 times

Question 3

Which one of the following will increase the accounts payable period,all else constant?

Accepted Answer

A) an increase in the cost of goods sold account value 
B) an increase in the ending accounts payable balance 
C) an increase in the cash cycle 
D) a decrease in the operating cycle 
E) an increase in the accounts payable turnover rate 
A) an increase in the cost of goods sold account value 
B) an increase in the ending accounts payable balance 
C) an increase in the cash cycle 
D) a decrease in the operating cycle 
E) an increase in the accounts payable turnover rate

Question 4

Which one of the following statements is correct?

Accepted Answer

A) The assignment of receivables involves selling the firm's accounts receivables at full price. 
B) Lines of credit frequently require a cleanup period. 
C) With maturity factoring, the borrower receives the loan amount immediately. 
D) Commercial paper is short-term financing offered to highly-rated corporations by major banks. 
E) Credit card receivables funding is a relatively inexpensive method of borrowing on a short-term basis. 
A) The assignment of receivables involves selling the firm's accounts receivables at full price. 
B) Lines of credit frequently require a cleanup period. 
C) With maturity factoring, the borrower receives the loan amount immediately. 
D) Commercial paper is short-term financing offered to highly-rated corporations by major banks. 
E) Credit card receivables funding is a relatively inexpensive method of borrowing on a short-term basis.

Question 5

A manufacturing firm has a 90-day collection period.The firm produces seasonal merchandise and thus has the least sales during the first quarter of a year and the highest level of sales during the fourth quarter of a year.The firm maintains a relatively steady level of production which means that its cash disbursements are fairly equal in all quarters.The firm is most apt to face a cash-out situation in:

Accepted Answer

A) the first quarter. 
B) the second quarter. 
C) the third quarter. 
D) the fourth quarter. 
E) any quarter with equal probabilities of occurrence. 
A) the first quarter. 
B) the second quarter. 
C) the third quarter. 
D) the fourth quarter. 
E) any quarter with equal probabilities of occurrence.

Question 6

The Mish Mash Store has a beginning cash balance of $440 on March 1.The firm has projected sales of $610 in February,$680 in March,and $740 in April.The cost of goods sold is equal to 70 percent of sales.Goods are purchased one month prior to the month of sale.The accounts payable period is 30 days and the accounts receivable period is 10 days.The firm has monthly cash expenses of $125.What is the projected ending cash balance at the end of March? Assume every month has 30 days.

Accepted Answer

A) $461 
B) $496 
C) $507 
D) $567 
E) $621 
A) $461 
B) $496 
C) $507 
D) $567 
E) $621

Question 7

The Sports Store has a $100,000 line of credit with City Bank.The loan agreement requires that 2 percent of the unused portion of the credit line be deposited in a non-interest bearing account as a compensating balance.The interest rate on the borrowed funds is 1.75 percent per quarter.The Sport Store's short-term investments are paying 1.5 percent per quarter.What is the effective annual interest rate on the line of credit if The Sports Store borrows the entire $100,000 for one year? Assume any funds borrowed or invested use compound interest.

Accepted Answer

A) 7.19 percent 
B) 7.76 percent 
C) 8.00 percent 
D) 8.08 percent 
E) 8.14 percent 
A) 7.19 percent 
B) 7.76 percent 
C) 8.00 percent 
D) 8.08 percent 
E) 8.14 percent

Question 8

Shortage costs include which of the following?
I.disruption of production schedules
II.inventory ordering costs
III.lost customer goodwill
IV.brokerage costs

Accepted Answer

A) I and II only 
B) II and III only 
C) II, III, and IV only 
D) I, II, and III only 
E) I, II, III, and IV 
A) I and II only 
B) II and III only 
C) II, III, and IV only 
D) I, II, and III only 
E) I, II, III, and IV

Question 9

Fancy Footwear has a line of credit with a local bank in the amount of $80,000.The loan agreement calls for interest of 7 percent with a compensating balance of 5 percent,which is based on the total amount borrowed.The compensating balance will be deposited into an interest-free account.What is the effective interest rate on the loan if the firm needs to borrow $75,000 for one year to cover operating expenses?

Accepted Answer

A) 7.37 percent 
B) 7.43 percent 
C) 7.56 percent 
D) 8.17 percent 
E) 8.33 percent 
A) 7.37 percent 
B) 7.43 percent 
C) 7.56 percent 
D) 8.17 percent 
E) 8.33 percent

An increase in which one of the following is an indicator that an accounts receivable policy is becoming more restrictive?

A national firm has sales of $729,000 and cost of goods sold of $478,000.At the beginning of the year,the inventory was $37,000.At the end of the year,the inventory balance was $41,000.What is the inventory turnover rate?

Which one of the following will increase the accounts payable period,all else constant?

Which one of the following statements is correct?

Shortage costs include which of the following? I.disruption of production schedules II.inventory ordering costs III.lost customer goodwill IV.brokerage costs

Introduction to Corporate Finance

Financial Statements, Taxes, and Cash Flow

Working With Financial Statements

Long-Term Financial Planning and Growth

Introduction to Valuation: The Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Project Analysis and Evaluation

Some Lessons From Capital Market History

Return, Risk, and the Security Market Line

Cost of Capital

Raising Capital

Financial Leverage and Capital Structure Policy

Dividends and Payout Policy

Cash and Liquidity Management

Credit and Inventory Management

International Corporate Finance

Behavioral Finance: Implications for Financial Management

Enterprise Risk Management

Options and Corporate Finance

Option Valuation

Mergers and Acquisitions

Leasing

Filters

Exam 18: Short-Term Finance and Planning

An increase in which one of the following is an indicator that an accounts receivable policy is becoming more restrictive?

A national firm has sales of $729,000 and cost of goods sold of $478,000.At the beginning of the year,the inventory was $37,000.At the end of the year,the inventory balance was $41,000.What is the inventory turnover rate?

Which one of the following will increase the accounts payable period,all else constant?

Which one of the following statements is correct?

Shortage costs include which of the following? I.disruption of production schedules II.inventory ordering costs III.lost customer goodwill IV.brokerage costs

Introduction to Corporate Finance

Financial Statements, Taxes, and Cash Flow

Working With Financial Statements

Long-Term Financial Planning and Growth

Introduction to Valuation: The Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Project Analysis and Evaluation

Some Lessons From Capital Market History

Return, Risk, and the Security Market Line

Cost of Capital

Raising Capital

Financial Leverage and Capital Structure Policy

Dividends and Payout Policy

Cash and Liquidity Management

Credit and Inventory Management

International Corporate Finance

Behavioral Finance: Implications for Financial Management

Enterprise Risk Management

Options and Corporate Finance

Option Valuation

Mergers and Acquisitions

Leasing

Filters