Question 1

The level of investment in accounts receivable depends on:

Accepted Answer

A) credit analysis 
B) credit terms 
C) collection efforts 
D) all the above 
E) none of the above 
A) credit analysis 
B) credit terms 
C) collection efforts 
D) all the above 
E) none of the above

Question 2

1A.28.Which one of the following activities is not a major component of the operating cycle?

Accepted Answer

A) manufacturing process 
B) selling effort 
C) collection period 
D) asset investment decisions 
A) manufacturing process 
B) selling effort 
C) collection period 
D) asset investment decisions

Question 3

The size of the cash buffer depends upon:

Accepted Answer

A) the ability to easily acquire financing on short notice 
B) the predictability of cash inflows 
C) management preferences 
D) all the above 
A) the ability to easily acquire financing on short notice 
B) the predictability of cash inflows 
C) management preferences 
D) all the above

Question 4

The disbursement float is the delay in transferring the means of payment from the payor (customer) to the payee (the provider of goods or services).

Accepted Answer

A) True 
 B)False

Question 5

Working capital does not include:

Accepted Answer

A) cash 
B) accounts receivable 
C) marketable securities 
D) property, plant, and equipment 
A) cash 
B) accounts receivable 
C) marketable securities 
D) property, plant, and equipment

Question 6

BP has a cash conversion cycle of 80 days, an average collection period of 25 days, and an average age of inventory of 70 50 days.Based on this information, BPs operating cycle is ________ days.

Accepted Answer

A) 85 
B) 75 
C) 65105 
D) 55130 
E) none of the above 
A) 85 
B) 75 
C) 65105 
D) 55130 
E) none of the above

Question 7

The time between when the firm pays its suppliers and when it collects money from its customers is known as the:

Accepted Answer

A) operating cycle 
B) cash conversion cycle 
C) accounts receivable period 
D) none of the above 
A) operating cycle 
B) cash conversion cycle 
C) accounts receivable period 
D) none of the above

Question 8

Which one of the following activities is not a major component of the short-term cash operating cycle?

Accepted Answer

A) manufacturing process 
B) selling effort 
C) collection period 
D) asset investment decisions 
A) manufacturing process 
B) selling effort 
C) collection period 
D) asset investment decisions

Question 9

A survey of financial managers found they spend nearly what percent of their time dealing with financial planning, budgeting, and working capital issues?

Accepted Answer

A) 10 percent 
B) 30 percent 
C) 50 percent 
D) 70 percent 
A) 10 percent 
B) 30 percent 
C) 50 percent 
D) 70 percent

Question 10

One type of investment that would not be suitable for marketable securities would be:

Accepted Answer

A) bankers' acceptances 
B) short-term notes of U.S.government agencies 
C) negotiable CD's 
D) mortgages 
A) bankers' acceptances 
B) short-term notes of U.S.government agencies 
C) negotiable CD's 
D) mortgages

Question 11

More efficient management of working capital assets will lessen the firm's needs for financing.

Accepted Answer

A) True 
 B)False

Question 12

A mercantile credit bureau serves primarily as a (n):

Accepted Answer

A) collection agency for delinquent accounts 
B) common meeting place where credit managers may exchange information 
C) organization through which accounts receivable may be sold to other businesses 
D) central record-keeping organization for credit information on business firms 
A) collection agency for delinquent accounts 
B) common meeting place where credit managers may exchange information 
C) organization through which accounts receivable may be sold to other businesses 
D) central record-keeping organization for credit information on business firms

Question 13

BP has an average age of inventory of 60 70 days, an average collection period of 45 days, and an average payment period of 30 days.Based on this information, BPs cash conversion cycle is ________ days.

Accepted Answer

A) 2515 
B) 3540 
C) 4555 
D) 5585 
E) none of the above 
A) 2515 
B) 3540 
C) 4555 
D) 5585 
E) none of the above

Question 14

A banker's acceptance is used to finance international trade, represents an unconditional obligation of an accepting bank, and has a yield that closely follows the yield on commercial paper.

Accepted Answer

A) True 
 B)False

Question 15

A negative cash conversion cycle indicates that the

Accepted Answer

A) operating cycle exceeds the average payment period. 
B) average payment period is less than the operating cycle. 
C) firm is shortening its average payment period and lengthening its average collection period. 
D) lengthening its average collection period and lengthening its inventory period. 
E) none of above are correct 
A) operating cycle exceeds the average payment period. 
B) average payment period is less than the operating cycle. 
C) firm is shortening its average payment period and lengthening its average collection period. 
D) lengthening its average collection period and lengthening its inventory period. 
E) none of above are correct

Question 16

The basic strategies that should be employed by the business firm in managing cash include all of the following EXCEPT

Accepted Answer

A) paying accounts payable as late as possible without damaging the firm's credit rating. 
B) turning over inventory as quickly as possible while avoiding stock outs. 
C) collecting accounts receivable as quickly as possible without damaging customer relationships. 
D) all of the above 
A) paying accounts payable as late as possible without damaging the firm's credit rating. 
B) turning over inventory as quickly as possible while avoiding stock outs. 
C) collecting accounts receivable as quickly as possible without damaging customer relationships. 
D) all of the above

Question 17

Assume a firm's production process requires an average of 80 days to go from raw materials to finished products and another 40 days before the finished goods are sold.If the accounts receivable cycle is 70 days and the accounts payable cycle is 80 days, what would the short-term operating cycle be?

Accepted Answer

A) 110 days 
B) 130 days 
C) 190 days 
D) 270 days 
A) 110 days 
B) 130 days 
C) 190 days 
D) 270 days

Question 18

Holding all other factors constant, if a firm increases its current liabilities relative to total assets,

Accepted Answer

A) it increases return and reduces risk. 
B) it increases return and increases risk. 
C) it reduces return and reduces risk. 
D) it reduces return and increases risk. 
E) none of above are correct 
A) it increases return and reduces risk. 
B) it increases return and increases risk. 
C) it reduces return and reduces risk. 
D) it reduces return and increases risk. 
E) none of above are correct

Question 19

By multiplying the average sales per day times the inventory conversion period, the inventories investment amount can be determined.

Accepted Answer

A) True 
 B)False

Question 20

Cash disbursements may include all of the following EXCEPT

Accepted Answer

A) savings deposits 
B) depreciation expense 
C) amortization 
D) accrued wages 
E) none of the above 
A) savings deposits 
B) depreciation expense 
C) amortization 
D) accrued wages 
E) none of the above

The level of investment in accounts receivable depends on:

1A.28.Which one of the following activities is not a major component of the operating cycle?

The size of the cash buffer depends upon:

The disbursement float is the delay in transferring the means of payment from the payor (customer) to the payee (the provider of goods or services).

Working capital does not include:

BP has a cash conversion cycle of 80 days, an average collection period of 25 days, and an average age of inventory of 70 50 days.Based on this information, BPs operating cycle is ________ days.

The time between when the firm pays its suppliers and when it collects money from its customers is known as the:

Which one of the following activities is not a major component of the short-term cash operating cycle?

A survey of financial managers found they spend nearly what percent of their time dealing with financial planning, budgeting, and working capital issues?

One type of investment that would not be suitable for marketable securities would be:

More efficient management of working capital assets will lessen the firm's needs for financing.

A mercantile credit bureau serves primarily as a (n):

BP has an average age of inventory of 60 70 days, an average collection period of 45 days, and an average payment period of 30 days.Based on this information, BPs cash conversion cycle is ________ days.

A banker's acceptance is used to finance international trade, represents an unconditional obligation of an accepting bank, and has a yield that closely follows the yield on commercial paper.

A negative cash conversion cycle indicates that the

The basic strategies that should be employed by the business firm in managing cash include all of the following EXCEPT

Assume a firm's production process requires an average of 80 days to go from raw materials to finished products and another 40 days before the finished goods are sold.If the accounts receivable cycle is 70 days and the accounts payable cycle is 80 days, what would the short-term operating cycle be?

Holding all other factors constant, if a firm increases its current liabilities relative to total assets,

By multiplying the average sales per day times the inventory conversion period, the inventories investment amount can be determined.

Cash disbursements may include all of the following EXCEPT

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Exam 15: Managing Working Capital

The level of investment in accounts receivable depends on:

1A.28.Which one of the following activities is not a major component of the operating cycle?

The size of the cash buffer depends upon:

The disbursement float is the delay in transferring the means of payment from the payor (customer) to the payee (the provider of goods or services).

Working capital does not include:

BP has a cash conversion cycle of 80 days, an average collection period of 25 days, and an average age of inventory of 70 50 days.Based on this information, BPs operating cycle is ________ days.

The time between when the firm pays its suppliers and when it collects money from its customers is known as the:

Which one of the following activities is not a major component of the short-term cash operating cycle?

A survey of financial managers found they spend nearly what percent of their time dealing with financial planning, budgeting, and working capital issues?

One type of investment that would not be suitable for marketable securities would be:

More efficient management of working capital assets will lessen the firm's needs for financing.

A mercantile credit bureau serves primarily as a (n):

BP has an average age of inventory of 60 70 days, an average collection period of 45 days, and an average payment period of 30 days.Based on this information, BPs cash conversion cycle is ________ days.

A banker's acceptance is used to finance international trade, represents an unconditional obligation of an accepting bank, and has a yield that closely follows the yield on commercial paper.

A negative cash conversion cycle indicates that the

The basic strategies that should be employed by the business firm in managing cash include all of the following EXCEPT

Assume a firm's production process requires an average of 80 days to go from raw materials to finished products and another 40 days before the finished goods are sold.If the accounts receivable cycle is 70 days and the accounts payable cycle is 80 days, what would the short-term operating cycle be?

Holding all other factors constant, if a firm increases its current liabilities relative to total assets,

By multiplying the average sales per day times the inventory conversion period, the inventories investment amount can be determined.

Cash disbursements may include all of the following EXCEPT

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters