Question 1

A level production plan has problems, such as idle plant and laid-off workers during slow sales months and production bottlenecks during busy times.

Accepted Answer

A) True 
 B)False

Question 2

Marketable securities are held primarily to meet:

Accepted Answer

A) transactions motives 
B) precautionary motives 
C) speculative motives 
D) leverage motives 
A) transactions motives 
B) precautionary motives 
C) speculative motives 
D) leverage motives

Question 3

When determining the short-term operating cycle, which of the following components reduce the length of the cycle?

Accepted Answer

A) increases in the inventory period 
B) increases in the accounts receivable period 
C) increases in the accounts payable period 
D) all of the above 
A) increases in the inventory period 
B) increases in the accounts receivable period 
C) increases in the accounts payable period 
D) all of the above

Question 4

A firm's cCash receipts may include all of the following except

Accepted Answer

A) dividends received from other firms 
B) collections of accounts receivable 
C) cash sales 
D) interest income 
E) all of the above 
A) dividends received from other firms 
B) collections of accounts receivable 
C) cash sales 
D) interest income 
E) all of the above

Question 5

Increases in the cash conversion cycle will lower the firm's short-term financing needs.

Accepted Answer

A) True 
 B)False

Question 6

Calculation of a firm's average collection period is the same as calculating the:

Accepted Answer

A) accounts receivable cycle 
B) inventory cycle 
C) accounts payable cycle 
D) short-term operatingcash cycle 
A) accounts receivable cycle 
B) inventory cycle 
C) accounts payable cycle 
D) short-term operatingcash cycle

Question 7

The cash conversion cycle can be reduced by lengthening the accounts payable period.

Accepted Answer

A) True 
 B)False

Question 8

The operating cycle can be reduced by lengthening the accounts payable period.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is most correct?

Accepted Answer

A) The financial crisis and recession of 2007-2009 had little effect on the ability of borrower firms to obtain short-term financing and for firms with surplus funds to invest in short-term instruments. 
B) The financial crisis and recession of 2007-2009 had strong effects on the ability of borrower firms to obtain short-term financing and for firms with surplus funds to invest in short-term instruments. 
C) The financial crisis and recession of 2007-2009 had strong effects on the ability of borrower firms to obtain short-term financing but made it easy for firms with surplus funds to invest in short-term instruments. 
D) The financial crisis and recession of 2007-2009 had little effect on the ability of borrower firms to obtain short-term financing but made it easy for firms with surplus funds to invest in short-term instruments. 
E) none of the above 
A) The financial crisis and recession of 2007-2009 had little effect on the ability of borrower firms to obtain short-term financing and for firms with surplus funds to invest in short-term instruments. 
B) The financial crisis and recession of 2007-2009 had strong effects on the ability of borrower firms to obtain short-term financing and for firms with surplus funds to invest in short-term instruments. 
C) The financial crisis and recession of 2007-2009 had strong effects on the ability of borrower firms to obtain short-term financing but made it easy for firms with surplus funds to invest in short-term instruments. 
D) The financial crisis and recession of 2007-2009 had little effect on the ability of borrower firms to obtain short-term financing but made it easy for firms with surplus funds to invest in short-term instruments. 
E) none of the above

Question 10

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) minimize 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) minimize the cash requirement. 
D) maximize cash outflows. 
E) none of above are correct

Question 11

Holding all other factors constant, if a firm increases its current assets 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 12

A firm's excess cash balance during a particular month could be best deployed if it were

Accepted Answer

A) financed with short term investments 
B) financed with long term investments 
C) invested in short term investments 
D) invested in long term investments 
E) none of the above 
A) financed with short term investments 
B) financed with long term investments 
C) invested in short term investments 
D) invested in long term investments 
E) none of the above

Question 13

Ithaca Iron has annual operating outlays of $13,800,000 and a cash conversion cycle of 60 50 days.If the firm currently pays 12 10 percent for negotiated financing and reduces its cash conversion cycle to 50 45 days, the annual savings is closest to

Accepted Answer

A) $560,000. 
B) $10,000. 
C) $26,000. 
D) $16,000. 
E) none of above are correct 
A) $560,000. 
B) $10,000. 
C) $26,000. 
D) $16,000. 
E) none of above are correct

Question 14

Dun & Bradstreet serves as:

Accepted Answer

A) an agency for rating the bonds of businesses and governmental bodies 
B) the principal rating agency for commercial paper 
C) a research and advisory facility for stocks and bonds 
D) a general credit reporting agency covering all fields of business activity 
A) an agency for rating the bonds of businesses and governmental bodies 
B) the principal rating agency for commercial paper 
C) a research and advisory facility for stocks and bonds 
D) a general credit reporting agency covering all fields of business activity

Question 15

The operating cycle measures the time between when a firm pays its suppliers for inventory and when it collects cash from customers on a sale of the finished product.

Accepted Answer

A) True 
 B)False

Question 16

A firm can reduce its cash conversion cycle by

Accepted Answer

A) increasing its average age of inventory 
B) increasing its average collection period 
C) decreasing its average payment period 
D) none of the above 
A) increasing its average age of inventory 
B) increasing its average collection period 
C) decreasing its average payment period 
D) none of the above

Question 17

Working capital is essentially a firm's current assets and consists of cash, accounts receivable, inventories, plant and equipment.

Accepted Answer

A) True 
 B)False

Question 18

Theoretically, the transactions demand for cash could be reduced to zero.

Accepted Answer

A) True 
 B)False

Question 19

Cash disbursements may include all of the following EXCEPT

Accepted Answer

A) tax payments 
B) rent payments 
C) wage payments 
D) fixed asset outlays 
E) all of the above 
A) tax payments 
B) rent payments 
C) wage payments 
D) fixed asset outlays 
E) all of the above

Question 20

The size of the accounts payable is affected by the level of the firm's cost of goods sold and the average payment period.

Accepted Answer

A) True 
 B)False

A level production plan has problems, such as idle plant and laid-off workers during slow sales months and production bottlenecks during busy times.

Marketable securities are held primarily to meet:

When determining the short-term operating cycle, which of the following components reduce the length of the cycle?

A firm's cCash receipts may include all of the following except

Increases in the cash conversion cycle will lower the firm's short-term financing needs.

Calculation of a firm's average collection period is the same as calculating the:

The cash conversion cycle can be reduced by lengthening the accounts payable period.

The operating cycle can be reduced by lengthening the accounts payable period.

Which of the following statements is most correct?

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

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

A firm's excess cash balance during a particular month could be best deployed if it were

Ithaca Iron has annual operating outlays of $13,800,000 and a cash conversion cycle of 60 50 days.If the firm currently pays 12 10 percent for negotiated financing and reduces its cash conversion cycle to 50 45 days, the annual savings is closest to

Dun & Bradstreet serves as:

The operating cycle measures the time between when a firm pays its suppliers for inventory and when it collects cash from customers on a sale of the finished product.

A firm can reduce its cash conversion cycle by

Working capital is essentially a firm's current assets and consists of cash, accounts receivable, inventories, plant and equipment.

Theoretically, the transactions demand for cash could be reduced to zero.

Cash disbursements may include all of the following EXCEPT

The size of the accounts payable is affected by the level of the firm's cost of goods sold and the average payment 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

Exam 15: Managing Working Capital

A level production plan has problems, such as idle plant and laid-off workers during slow sales months and production bottlenecks during busy times.

Marketable securities are held primarily to meet:

When determining the short-term operating cycle, which of the following components reduce the length of the cycle?

A firm's cCash receipts may include all of the following except

Increases in the cash conversion cycle will lower the firm's short-term financing needs.

Calculation of a firm's average collection period is the same as calculating the:

The cash conversion cycle can be reduced by lengthening the accounts payable period.

The operating cycle can be reduced by lengthening the accounts payable period.

Which of the following statements is most correct?

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

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

A firm's excess cash balance during a particular month could be best deployed if it were

Ithaca Iron has annual operating outlays of $13,800,000 and a cash conversion cycle of 60 50 days.If the firm currently pays 12 10 percent for negotiated financing and reduces its cash conversion cycle to 50 45 days, the annual savings is closest to

Dun & Bradstreet serves as:

The operating cycle measures the time between when a firm pays its suppliers for inventory and when it collects cash from customers on a sale of the finished product.

A firm can reduce its cash conversion cycle by

Working capital is essentially a firm's current assets and consists of cash, accounts receivable, inventories, plant and equipment.

Theoretically, the transactions demand for cash could be reduced to zero.

Cash disbursements may include all of the following EXCEPT

The size of the accounts payable is affected by the level of the firm's cost of goods sold and the average payment 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