Exam 14: Working Capital Management and Policies

The optimal cash replenishment level will increase with all of the following changes EXCEPT:

Hollywood Shoes would like to maintain their cash account at a minimum level of $50,000,but expects the standard deviation in net daily cash flows to be $4,000; the effective annual rate on marketable securities to be 6 percent per year; and the trading cost per sale or purchase of marketable securities to be $100 per transaction.What will be their optimal upper cash limit?

Which of the following is NOT a reason for holding cash?

Which of the following current asset financing policies reflects the firm financing the seasonally-adjusted average level of asset demand with long-term debt and equity enabling it to use both short-term financing and short-term investing as needed?

The area of management concerned with designing and overseeing the process of production is which of the following?

If a firm has a cash cycle of 20 days and an operating cycle of 60 days,what is its payables turnover?

Which of the following is a money-market security,issued by large banks and medium-to-large corporations that matures in nine months or less?

Imagine a firm has a temporary surplus of cash meant to fund an expansion project in the next nine months.Which of the following statements is correct?

Which of the following current asset financing policies reflects the decision to finance the peaks of current assets with long-term debt and equity that provides the firm with a surplus of cash and marketable securities most of the time,except during peak asset demand?

PB&J Company has sales of $900,000 and cost of goods sold of $450,000.The firm had a beginning inventory of $70,000 and an ending inventory of $65,000.What is the length of the days' sales in inventory?

If a firm's inventory ratio increases,what will happen to the firm's cash cycle?

Suppose that LilyMac Photography has annual sales of $290,000; cost of goods sold of $155,000; average inventories of $3,500; average accounts receivable of $21,000; and an average accounts payable balance of $10,000.Assuming that all of LilyMac's sales are on credit,what will be the firm's cash cycle?

All of the following are different techniques that can be used to help firms reduce collection float EXCEPT:

Stellar Shoes would like to maintain their cash account at a minimum level of $25,000,but expects the standard deviation in net daily cash flows to be $2,000; the effective annual rate on marketable securities to be 5 percent per year; and the trading cost per sale or purchase of marketable securities to be $100 per transaction.What will be their optimal upper cash limit?

What must the rate be less than to be worth it to incur a compensating balance of $2,000 in order to get a 2 percent lower interest rate on a one-year,pure discount loan of $50,000?

Elle Mae Industries has a cash balance of $50,000; accounts payable of $150,000; inventory of $190,000; accounts receivable of $250,000; notes payable of $210,000; and accrued wages and taxes of $40,000.How much net working capital does the firm need to fund?

Suppose that Jamie's Jams has annual sales of $900,000; cost of goods sold of $600,000; average inventories of $11,000; average accounts receivable of $50,000; and an average accounts payable balance of $30,000.Assuming that all of Jamie's sales are on credit,what will be the firm's cash cycle?

Which of the following is a short-term promissory note issued by a corporation,bearing the unconditional guarantee of a major bank?

If a firm has a cash cycle of 71 days and an operating cycle of 139 days,what is its average payment period?

The operating cycle will decrease with all of the following changes EXCEPT: