Question 1

Which of the following are the "5-C's of Credit"?

Accepted Answer

A) Character, Capacity, Compensation, Collateral, Conditions 
B) Character, Cash, Credit, Collateral, Collectability 
C) Character, Capacity, Capital, Collateral, Conditions 
D) Cash, Capacity, Capital, Compensation, Collectability 
A) Character, Capacity, Compensation, Collateral, Conditions 
B) Character, Cash, Credit, Collateral, Collectability 
C) Character, Capacity, Capital, Collateral, Conditions 
D) Cash, Capacity, Capital, Compensation, Collectability

Question 2

Which of the following statements is FALSE?

Accepted Answer

A) The Check Clearing for the 21st Century Act (Check 21), which became effective on October 28, 2004, eliminated the disbursement float due to the check-clearing process. 
B) Trade credit is, in essence, a loan from the selling firm to its customer. 
C) The accounts receivable balance represents the amount that a firm owes its suppliers for goods that it has received but for which it has not yet paid. 
D) Providing financing at below-market rates is an indirect way to lower prices for only certain customers. 
A) The Check Clearing for the 21st Century Act (Check 21), which became effective on October 28, 2004, eliminated the disbursement float due to the check-clearing process. 
B) Trade credit is, in essence, a loan from the selling firm to its customer. 
C) The accounts receivable balance represents the amount that a firm owes its suppliers for goods that it has received but for which it has not yet paid. 
D) Providing financing at below-market rates is an indirect way to lower prices for only certain customers.

Question 3

Which of the following best describes the collection float?

Accepted Answer

A) how long it takes the firm to receive the check after the customer has mailed it 
B) how long it takes the firm to process the check and deposit it in the bank 
C) how long it takes before the bank gives the firm credit for the funds 
D) how long it takes for a firm to be able to use funds after a customer has paid for its goods 
A) how long it takes the firm to receive the check after the customer has mailed it 
B) how long it takes the firm to process the check and deposit it in the bank 
C) how long it takes before the bank gives the firm credit for the funds 
D) how long it takes for a firm to be able to use funds after a customer has paid for its goods

Question 4

Which of the following statements is FALSE?

Accepted Answer

A) The lower the discount percentage offered, the greater the cost of forgoing the discount and using trade credit. 
B) A firm should choose to borrow using accounts payable only if trade credit is the cheapest source of funding. 
C) A firm should always pay on the latest day allowed. 
D) A firm should strive to keep its money working for it as long as possible without developing a bad relationship with its suppliers or engaging in unethical practices. 
A) The lower the discount percentage offered, the greater the cost of forgoing the discount and using trade credit. 
B) A firm should choose to borrow using accounts payable only if trade credit is the cheapest source of funding. 
C) A firm should always pay on the latest day allowed. 
D) A firm should strive to keep its money working for it as long as possible without developing a bad relationship with its suppliers or engaging in unethical practices.

Question 5

The cash conversion cycle (CCC)is defined as ________.

Accepted Answer

A) Inventory Days + Accounts Receivable Days - Accounts Payable Days 
B) Inventory Days - Accounts Receivable Days - Accounts Payable Days 
C) Inventory Days + Accounts Receivable Days + Accounts Payable Days 
D) Inventory Days + Accounts Payable Days - Accounts Receivable Days 
A) Inventory Days + Accounts Receivable Days - Accounts Payable Days 
B) Inventory Days - Accounts Receivable Days - Accounts Payable Days 
C) Inventory Days + Accounts Receivable Days + Accounts Payable Days 
D) Inventory Days + Accounts Payable Days - Accounts Receivable Days

Question 6

Which of the following would decrease a firm's cash conversion cycle?

Accepted Answer

A) Increase the inventory days. 
B) Increase the accounts receivable days. 
C) Increase the accounts payable days. 
D) Increase the cash days. 
A) Increase the inventory days. 
B) Increase the accounts receivable days. 
C) Increase the accounts payable days. 
D) Increase the cash days.

Question 7

ALT had $25 million in sales last year. Its cost of goods sold was $15 million and its average inventory balance was $3 million. What was its average days of inventory?

Accepted Answer

A) 43.8 days 
B) 36.5 days 
C) 73.0 days 
D) 9.1 days 
A) 43.8 days 
B) 36.5 days 
C) 73.0 days 
D) 9.1 days

Question 8

Which of the following is not a direct cost associated with inventory?

Accepted Answer

A) acquisition costs 
B) order costs 
C) carrying costs 
D) stock-out costs 
A) acquisition costs 
B) order costs 
C) carrying costs 
D) stock-out costs

Which of the following are the "5-C's of Credit"?

Which of the following statements is FALSE?

Which of the following best describes the collection float?

Which of the following statements is FALSE?

The cash conversion cycle (CCC)is defined as ________.

Which of the following would decrease a firm's cash conversion cycle?

ALT had $25 million in sales last year. Its cost of goods sold was $15 million and its average inventory balance was $3 million. What was its average days of inventory?

Which of the following is not a direct cost associated with inventory?

Corporate Finance and the Financial Manager

Introduction to Financial Statement Analysis

Time Value of Money: an Introduction

Time Value of Money: Valuing Cash Flow Streams

Interest Rates

Bonds

Stock Valuation

Investment Decision Rules

Fundamentals of Capital Budgeting

Stock Valuation: a Second Look

Risk and Return in Capital Markets

Systematic Risk and the Equity Risk Premium

The Cost of Capital

Raising Equity Capital

Debt Financing

Capital Structure

Payout Policy

Financial Modeling and Pro Forma Analysis

Short-Term Financial Planning

Option Applications and Corporate Finance

Mergers and Acquisitions

International Corporate Finance

Leasing

Insurance and Risk Management

Corporate Governance

Filters

Exam 19: Working Capital Management

Which of the following are the "5-C's of Credit"?

Which of the following statements is FALSE?

Which of the following best describes the collection float?

Which of the following statements is FALSE?

The cash conversion cycle (CCC)is defined as ________.

Which of the following would decrease a firm's cash conversion cycle?

ALT had $25 million in sales last year. Its cost of goods sold was $15 million and its average inventory balance was $3 million. What was its average days of inventory?

Which of the following is not a direct cost associated with inventory?

Corporate Finance and the Financial Manager

Introduction to Financial Statement Analysis

Time Value of Money: an Introduction

Time Value of Money: Valuing Cash Flow Streams

Interest Rates

Bonds

Stock Valuation

Investment Decision Rules

Fundamentals of Capital Budgeting

Stock Valuation: a Second Look

Risk and Return in Capital Markets

Systematic Risk and the Equity Risk Premium

The Cost of Capital

Raising Equity Capital

Debt Financing

Capital Structure

Payout Policy

Financial Modeling and Pro Forma Analysis

Short-Term Financial Planning

Option Applications and Corporate Finance

Mergers and Acquisitions

International Corporate Finance

Leasing

Insurance and Risk Management

Corporate Governance

Filters