Question 1

As sales increase over time, assets will increase at the same growth rate so long as the

Accepted Answer

A) asset turnover increases 
B) asset turnover ratio remains constant 
C) asset turnover ratio decreases 
D) profit margin remains constant 
A) asset turnover increases 
B) asset turnover ratio remains constant 
C) asset turnover ratio decreases 
D) profit margin remains constant

Question 2

The ________ is the time period that elapses from the point when the firm makes the outlay to purchases raw materials on account to the point when payment is made to the supplier of the goods.

Accepted Answer

A) cash conversion cycle 
B) average payment period 
C) average age of inventory 
D) average collection period 
E) none of the above 
A) cash conversion cycle 
B) average payment period 
C) average age of inventory 
D) average collection period 
E) none of the above

Question 3

In general, the more net working capital a company has

Accepted Answer

A) the greater the risk. 
B) the lower the risk. 
C) the less likely creditors will lend to the firm. 
D) none of the above 
A) the greater the risk. 
B) the lower the risk. 
C) the less likely creditors will lend to the firm. 
D) none of the above

Question 4

BP has an operating cycle of 120 days, an average collection period of 40 days, and an average payment period of 30 days.Based on this information, BPs average age of inventory is ________ days.

Accepted Answer

A) 80 
B) 50 
C) 90 
D) 70 
E) none of the above 
A) 80 
B) 50 
C) 90 
D) 70 
E) none of the above

Question 5

Which of the following is not an advantage of short-term borrowing?

Accepted Answer

A) flexibility 
B) establishing continuous relationships with a bank or financial institution 
C) frequent renewals 
D) lower cost 
A) flexibility 
B) establishing continuous relationships with a bank or financial institution 
C) frequent renewals 
D) lower cost

Question 6

Which of the following would not normally be discussed when describing a firm's short-term operating cycle?

Accepted Answer

A) manufacturing process 
B) selling effort 
C) acquiring financing 
D) collection period 
A) manufacturing process 
B) selling effort 
C) acquiring financing 
D) collection period

Question 7

A firm with a operating cash conversion cycle of 200 days and an operating cash conversion cycle of 120 days has an average payment period of:

Accepted Answer

A) 320 
B) 180 
C) 3 
D) cannot be determined from this information 
A) 320 
B) 180 
C) 3 
D) cannot be determined from this information

Question 8

Methods used to speed up collections include all of the following except:

Accepted Answer

A) a lockbox system 
B) remote disbursement locations 
C) pre-authorized checks 
D) All of the statements above are correct. 
A) a lockbox system 
B) remote disbursement locations 
C) pre-authorized checks 
D) All of the statements above are correct.

Question 9

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

Accepted Answer

A) 95 
B) 85 
C) 75 
D) 65 
E) none of the above 
A) 95 
B) 85 
C) 75 
D) 65 
E) none of the above

Question 10

Taking advantage of unusual cash discounts or price bargains is an example of the:

Accepted Answer

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

Question 11

The transaction motive for holding cash is the demand for cash needed to take advantage of unusual cash discounts for needed materials.

Accepted Answer

A) True 
 B)False

Question 12

U.S.Treasury bills are sold at a discount through competitive bidding in an annual auction.

Accepted Answer

A) True 
 B)False

Question 13

A firm has a minimum desired cash balance of $120,000.Any cash shortfalls will be made up with short-term financing.The net cash flow for January is $80,000 and the beginning balance for that month is $15,000: short-term financing requirements that month will be:

Accepted Answer

A) -$120,000 
B) $25,000 
C) $215,000 
D) cannot determine from this information 
A) -$120,000 
B) $25,000 
C) $215,000 
D) cannot determine from this information

Question 14

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) operating in a fashion that requires maximum cash. 
D) collecting accounts receivable as quickly as possible without damaging customer rapport. 
E) none 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) operating in a fashion that requires maximum cash. 
D) collecting accounts receivable as quickly as possible without damaging customer rapport. 
E) none of the above

Question 15

Deposits placed in foreign banks that remain denominated in U.S.dollars are called:

Accepted Answer

A) bankers' acceptances 
B) Eurodollars 
C) federal funds 
D) commercial paper 
A) bankers' acceptances 
B) Eurodollars 
C) federal funds 
D) commercial paper

Question 16

Which of the following statements is false?

Accepted Answer

A) the cash conversion cycle is the time between when the firm pays its suppliers and when it collects money from its customers. 
B) Because commercial paper rates are typically below the U.S.Treasury bill rates, commercial paper is a valuable short-term financing source for high quality business firms. 
C) More efficient management of working capital assets will lessen the firm's need to obtain financing. 
D) All of the statements above are correct. 
A) the cash conversion cycle is the time between when the firm pays its suppliers and when it collects money from its customers. 
B) Because commercial paper rates are typically below the U.S.Treasury bill rates, commercial paper is a valuable short-term financing source for high quality business firms. 
C) More efficient management of working capital assets will lessen the firm's need to obtain financing. 
D) All of the statements above are correct.

Question 17

If a firm's inventories on hand are $200,000 and its cost of goods sold is $600,000, what is the inventory turnover?

Accepted Answer

A) 2.0 times 
B) 3.0 times 
C) 4.0 times 
D) 5 0.33 times 
A) 2.0 times 
B) 3.0 times 
C) 4.0 times 
D) 5 0.33 times

Question 18

Which of the following statements is most correct? None of the above clone of prior item.

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 no effect 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 no effect 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 19

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

Accepted Answer

A) True 
 B)False

Question 20

The time it takes between when materials are ordered and cash is collected from receivables is referred to as the:

Accepted Answer

A) operating cycle 
B) cash conversion cycle 
C) assets turnover cycle 
D) sales or revenues cycle 
A) operating cycle 
B) cash conversion cycle 
C) assets turnover cycle 
D) sales or revenues cycle

As sales increase over time, assets will increase at the same growth rate so long as the

The ________ is the time period that elapses from the point when the firm makes the outlay to purchases raw materials on account to the point when payment is made to the supplier of the goods.

In general, the more net working capital a company has

BP has an operating cycle of 120 days, an average collection period of 40 days, and an average payment period of 30 days.Based on this information, BPs average age of inventory is ________ days.

Which of the following is not an advantage of short-term borrowing?

Which of the following would not normally be discussed when describing a firm's short-term operating cycle?

A firm with a operating cash conversion cycle of 200 days and an operating cash conversion cycle of 120 days has an average payment period of:

Methods used to speed up collections include all of the following except:

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

Taking advantage of unusual cash discounts or price bargains is an example of the:

The transaction motive for holding cash is the demand for cash needed to take advantage of unusual cash discounts for needed materials.

U.S.Treasury bills are sold at a discount through competitive bidding in an annual auction.

A firm has a minimum desired cash balance of $120,000.Any cash shortfalls will be made up with short-term financing.The net cash flow for January is $80,000 and the beginning balance for that month is $15,000: short-term financing requirements that month will be:

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

Deposits placed in foreign banks that remain denominated in U.S.dollars are called:

Which of the following statements is false?

If a firm's inventories on hand are $200,000 and its cost of goods sold is $600,000, what is the inventory turnover?

Which of the following statements is most correct? None of the above clone of prior item.

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

The time it takes between when materials are ordered and cash is collected from receivables is referred to as the:

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

As sales increase over time, assets will increase at the same growth rate so long as the

The ________ is the time period that elapses from the point when the firm makes the outlay to purchases raw materials on account to the point when payment is made to the supplier of the goods.

In general, the more net working capital a company has

BP has an operating cycle of 120 days, an average collection period of 40 days, and an average payment period of 30 days.Based on this information, BPs average age of inventory is ________ days.

Which of the following is not an advantage of short-term borrowing?

Which of the following would not normally be discussed when describing a firm's short-term operating cycle?

A firm with a operating cash conversion cycle of 200 days and an operating cash conversion cycle of 120 days has an average payment period of:

Methods used to speed up collections include all of the following except:

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

Taking advantage of unusual cash discounts or price bargains is an example of the:

The transaction motive for holding cash is the demand for cash needed to take advantage of unusual cash discounts for needed materials.

U.S.Treasury bills are sold at a discount through competitive bidding in an annual auction.

A firm has a minimum desired cash balance of $120,000.Any cash shortfalls will be made up with short-term financing.The net cash flow for January is $80,000 and the beginning balance for that month is $15,000: short-term financing requirements that month will be:

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

Deposits placed in foreign banks that remain denominated in U.S.dollars are called:

Which of the following statements is false?

If a firm's inventories on hand are $200,000 and its cost of goods sold is $600,000, what is the inventory turnover?

Which of the following statements is most correct? None of the above clone of prior item.

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

The time it takes between when materials are ordered and cash is collected from receivables is referred to as the:

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