Exam 14: Working Capital Management and Policies

Which of the following current asset financing policies reflects the firm financing the seasonally-adjusted average level of asset demand with long-term debt and equity enabling it to use both short-term financing and short-term investing as needed?

Which of the following is NOT one of the "five C's" of credit analysis?

Happy Feet would like to maintain their cash account at a minimum level of $75,000, but expects the standard deviation in net daily cash flows to be $5,000; the effective annual rate on marketable securities to be 7 percent per year; and the trading cost per sale or purchase of marketable securities to be $150 per transaction. What will be their optimal cash return point?

If a firm has a cash cycle of 32 days and an operating cycle of 67 days, what is its payables turnover?

MC Enterprises estimates that it takes, on average, seven days for their customers' payments to reach them, two day for the payments to be processed and deposited by their bookkeeping department, and three more days for the checks to clear once they're deposited. What is their collection float?

Scribble, Inc. has sales of $80,000 and cost of goods sold of $64,000. The firm had a beginning inventory of $10,000 and an ending inventory of $12,000. What is the length of the days' sales in inventory?

If a firm has a cash cycle of 41 days and an operating cycle of 76 days, what is its average payment period?

The optimal cash replenishment level will decrease with all of the following changes EXCEPT:

HotFoot Shoes would like to maintain their cash account at a minimum level of $35,000, but expect the standard deviation in net daily cash flows to be $2,000; the effective annual rate on marketable securities to be 5 percent per year; and the trading cost per sale or purchase of marketable securities to be $210 per transaction. What will be their optimal cash return point?

Joe's Burgers would like to maintain their cash account at a minimum level of $300,000, but expects the standard deviation in net daily cash flows to be $20,000; the effective annual rate on marketable securities to be 5.2 percent per year; and the trading cost per sale or purchase of marketable securities to be $22.55 per transaction. What will be their optimal upper cash limit?

The inventory order quantity that minimizes total holding and ordering costs is which of the following?

Which of the following is NOT one of the Baumol Model's unrealistic assumptions?

What is the difference between a lockbox system and concentration banking?

The operating cycle will decrease with all of the following changes EXCEPT:

What must the rate be less than to be worth it to incur a compensating balance of $20,000 in order to get a 2 percent lower interest rate on a one-year, pure discount loan of $200,000?

A firm wants to reduce its cash cycle. Which of the following actions will reduce its cash cycle?

Which of the following is a short-term promissory note issued by a corporation, bearing the unconditional guarantee of a major bank?

Imagine a firm has a temporary surplus of cash meant to fund an expansion project in the next nine months. Which of the following statements is correct?

Which of the following is a money-market security, issued by large banks and medium-to-large corporations, that matures in nine months or less?

If a firm has a cash cycle of 25 days and an operating cycle of 57 days, what is its average payment period?