Question 1

Activities that decrease the cash conversion cycle will increase the firm's need to obtain financing.

Accepted Answer

A) True 
 B)False

Question 2

Speculative motives for holding cash include holding funds to meet unexpected demands.

Accepted Answer

A) True 
 B)False

Question 3

The operating cycle measures the time it takes between ordering materials and collecting cash from receivables.

Accepted Answer

A) True 
 B)False

Question 4

Ithaca Iron has annual operating outlays of $1,800,000 and a cash conversion cycle of 60 days.If the firm currently pays 12 percent for negotiated financing and reduces its cash conversion cycle to 50 days, the annual savings is closest to

Accepted Answer

A) $60,000. 
B) $10,000. 
C) $6,000. 
D) $16,000. 
E) none of above are correct 
A) $60,000. 
B) $10,000. 
C) $6,000. 
D) $16,000. 
E) none of above are correct

Question 5

The goal of a company's cash management policy is to

Accepted Answer

A) increase the cash conversion cycle. 
B) increase the payment period. 
C) maximize the cash requirement. 
D) maximize cash outflows. 
E) none of above are correct 
A) increase the cash conversion cycle. 
B) increase the payment period. 
C) maximize the cash requirement. 
D) maximize cash outflows. 
E) none of above are correct

Question 6

Which of the following would not be a characteristic of commercial paper?

Accepted Answer

A) issued by well-known business firms 
B) debt is secured 
C) short-term debt 
D) all are characteristics of commercial paper 
A) issued by well-known business firms 
B) debt is secured 
C) short-term debt 
D) all are characteristics of commercial paper

Question 7

In a perfect world, a firm would prefer to have a

Accepted Answer

A) positive operating cycle. 
B) negative operating cycle. 
C) positive cash conversion cycle. 
D) negative cash conversion cycle. 
E) none of above are correct 
A) positive operating cycle. 
B) negative operating cycle. 
C) positive cash conversion cycle. 
D) negative cash conversion cycle. 
E) none of above are correct

Question 8

___________ These are short-term money market investments that are extremely safe and liquid; they can be quickly converted into cash at values very close to their intrinsic values.

Accepted Answer

A) preferred stocks. 
B) treasury bonds. 
C) corporate bonds. 
D) marketable securities. 
E) none of above are correct 
A) preferred stocks. 
B) treasury bonds. 
C) corporate bonds. 
D) marketable securities. 
E) none of above are correct

Question 9

A firm with an inventory period of 30 days, an accounts receivable period of 30 days, and an accounts payable period of 90 days has an operating cycle of _____ days.

Accepted Answer

A) 60 
B) -60 
C) 30 
D) -30 
A) 60 
B) -60 
C) 30 
D) -30

Question 10

To construct a cash budget, two sets of information are needed: estimated cash inflows and estimated cash outflows.

Accepted Answer

A) True 
 B)False

Question 11

The time between ordering materials and collecting cash from receivables 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 12

The cash conversion cycle measures a firm's financing gap in terms of time.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is most correct?

Accepted Answer

A) Eurodollars are deposits placed in foreign banks that remain denominated in U.S.dollars. 
B) Treasury bills are actively traded in secondary money markets. 
C) The most common trading unit for federal funds is $1 million. 
D) All of the above statements are correct. 
A) Eurodollars are deposits placed in foreign banks that remain denominated in U.S.dollars. 
B) Treasury bills are actively traded in secondary money markets. 
C) The most common trading unit for federal funds is $1 million. 
D) All of the above statements are correct.

Question 14

The principle of hedging calls for the matching of a firm's average:

Accepted Answer

A) liquidity of its assets with its liabilities and equity 
B) liquidity of its accounts receivable with its accounts payable 
C) maturities of its assets with its liabilities and equity 
D) maturities of its sales with its assets 
A) liquidity of its assets with its liabilities and equity 
B) liquidity of its accounts receivable with its accounts payable 
C) maturities of its assets with its liabilities and equity 
D) maturities of its sales with its assets

Question 15

Precautionary motives for holding cash include holding funds to take advantage of unusual cash discounts for needed materials.

Accepted Answer

A) True 
 B)False

Question 16

The inventory period may beis calculated as sales divided by inventories.

Accepted Answer

A) True 
 B)False

Question 17

The portion of current assets financed through long-term financing is referred to as the:

Accepted Answer

A) net working capital 
B) current ratio 
C) seasonal current assets 
D) fixed assets 
A) net working capital 
B) current ratio 
C) seasonal current assets 
D) fixed assets

Question 18

The operating cycle is the inventory conversion period plus the accounts receivable period.

Accepted Answer

A) True 
 B)False

Question 19

The federal funds rate is normally several points lower than the Treasury Bill rate.

Accepted Answer

A) True 
 B)False

Question 20

Both the operating cycle and the cash conversion cycle can be reduced by shortening the inventory period.

Accepted Answer

A) True 
 B)False

Activities that decrease the cash conversion cycle will increase the firm's need to obtain financing.

Speculative motives for holding cash include holding funds to meet unexpected demands.

The operating cycle measures the time it takes between ordering materials and collecting cash from receivables.

Ithaca Iron has annual operating outlays of $1,800,000 and a cash conversion cycle of 60 days.If the firm currently pays 12 percent for negotiated financing and reduces its cash conversion cycle to 50 days, the annual savings is closest to

The goal of a company's cash management policy is to

Which of the following would not be a characteristic of commercial paper?

In a perfect world, a firm would prefer to have a

___________ These are short-term money market investments that are extremely safe and liquid; they can be quickly converted into cash at values very close to their intrinsic values.

A firm with an inventory period of 30 days, an accounts receivable period of 30 days, and an accounts payable period of 90 days has an operating cycle of _____ days.

To construct a cash budget, two sets of information are needed: estimated cash inflows and estimated cash outflows.

The time between ordering materials and collecting cash from receivables is known as the:

The cash conversion cycle measures a firm's financing gap in terms of time.

Which of the following statements is most correct?

The principle of hedging calls for the matching of a firm's average:

Precautionary motives for holding cash include holding funds to take advantage of unusual cash discounts for needed materials.

The inventory period may beis calculated as sales divided by inventories.

The portion of current assets financed through long-term financing is referred to as the:

The operating cycle is the inventory conversion period plus the accounts receivable period.

The federal funds rate is normally several points lower than the Treasury Bill rate.

Both the operating cycle and the cash conversion cycle can be reduced by shortening the inventory period.

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

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Exam 15: Managing Working Capital

Activities that decrease the cash conversion cycle will increase the firm's need to obtain financing.

Speculative motives for holding cash include holding funds to meet unexpected demands.

The operating cycle measures the time it takes between ordering materials and collecting cash from receivables.

Ithaca Iron has annual operating outlays of $1,800,000 and a cash conversion cycle of 60 days.If the firm currently pays 12 percent for negotiated financing and reduces its cash conversion cycle to 50 days, the annual savings is closest to

The goal of a company's cash management policy is to

Which of the following would not be a characteristic of commercial paper?

In a perfect world, a firm would prefer to have a

___________ These are short-term money market investments that are extremely safe and liquid; they can be quickly converted into cash at values very close to their intrinsic values.

A firm with an inventory period of 30 days, an accounts receivable period of 30 days, and an accounts payable period of 90 days has an operating cycle of _____ days.

To construct a cash budget, two sets of information are needed: estimated cash inflows and estimated cash outflows.

The time between ordering materials and collecting cash from receivables is known as the:

The cash conversion cycle measures a firm's financing gap in terms of time.

Which of the following statements is most correct?

The principle of hedging calls for the matching of a firm's average:

Precautionary motives for holding cash include holding funds to take advantage of unusual cash discounts for needed materials.

The inventory period may beis calculated as sales divided by inventories.

The portion of current assets financed through long-term financing is referred to as the:

The operating cycle is the inventory conversion period plus the accounts receivable period.

The federal funds rate is normally several points lower than the Treasury Bill rate.

Both the operating cycle and the cash conversion cycle can be reduced by shortening the inventory period.

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