Exam 15: Managing Working Capital

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

The inventory conversion period is calculated by inventory divided by costs of goods sold.

The transactions motive is the demand for holding cash.

Which one of the following is a private firm that operates as a credit-reporting agency?

A firm with an inventory period of 100 days and an accounts receivable period of 50 days will have an operating cycle of 150 days.

Which of the following marketable securities is sold at a discount throughout competitive bidding in a weekly auction?

Sources of short-term financing such as accounts payable, notes payable, and accruals should be used to finance:

One item that does not affect the cash conversion cycle is:

Which of the following is not considered to be one of the five C's of credit analysis?

Credit extended on purchases to a firm's customers is called trade credit.

The time between when a payee sends payment and the funds are credited to the payeer's bank account is called the:

A firm can reduce its cash conversion cycle by

The account receivable period may be calculated as accounts receivable divided by sales.

Holding all other factors constant, if a firm increases its current liabilities relative to total assets, an immediate effect will be that

Marketable securities may be held for speculative motives.

___________ 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. None of the above clone of prior item.

If a firm purchases materials on credit and thus has accounts payable, its cash conversion cycle will be:

Reasons to invest in marketable securities would not include:

In general, the less net working capital a company has Identical to item 67

Fixed capital would be defined as the firm's fixed assets, which include plant, equipment and property.