Question 1

If a firm has a cash cycle of 25 days and an operating cycle of 80 days,what is its payables turnover?

Accepted Answer

A)  14.6 
B)  4.56 
C)  6.64 
D)  55 
A)  14.6 
B)  4.56 
C)  6.64 
D)  55

Question 2

Suppose that LilyMac Photography has annual sales of $218,000,cost of goods sold of $123,000,average inventories of $1,250,and average accounts receivable of $22,000.Assuming that all of LilyMac's sales are on credit,what will be the firm's operating cycle?

Accepted Answer

A)  40.54 days 
B)  45.13 days 
C)  41.16 days 
D)  37.82 days 
A)  40.54 days 
B)  45.13 days 
C)  41.16 days 
D)  37.82 days

Question 3

CM Enterprises estimates that it takes,on average,seven days for their customers' payments to reach them,one day for the payments to be processed and deposited by their bookkeeping department,and three more days for the check to clear once they're deposited.What is their collection float?

Accepted Answer

A)  11 days 
B)  10 days 
C)  8 days 
D)  7 days 
A)  11 days 
B)  10 days 
C)  8 days 
D)  7 days

Question 4

Joe's Burgers would like to maintain their cash account at a minimum level of $300,000,but expects the standard deviation in net daily cash flows to be $20,000; the effective annual rate on marketable securities to be 5.2 percent per year; and the trading cost per sale or purchase of marketable securities to be $22.55 per transaction.What will be their optimal upper cash limit?

Accepted Answer

A)  $320,000.00 
B)  $336,492.68 
C)  $409,478.04 
D)  $1,009,478.04 
A)  $320,000.00 
B)  $336,492.68 
C)  $409,478.04 
D)  $1,009,478.04

Question 5

If a firm has a cash cycle of 38 days and an operating cycle of 82 days,what is its payables turnover?

Accepted Answer

A)  8.79 
B)  8.30 
C)  9.53 
D)  10.89 
A)  8.79 
B)  8.30 
C)  9.53 
D)  10.89

Question 6

If a firm has a cash cycle of 47 days and an operating cycle of 92 days,what is its average payment period?

Accepted Answer

A)  45 
B)  47 
C)  92 
D)  139 
A)  45 
B)  47 
C)  92 
D)  139

Question 7

Which of the following will decrease the operating cycle?

Accepted Answer

A)  The cash cycle decreases. 
B)  The days' sales in inventory decreases by three days but the average collection period increases by two days. 
C)  The average payment period increases. 
D)  All of the options will decrease the operating cycle. 
A)  The cash cycle decreases. 
B)  The days' sales in inventory decreases by three days but the average collection period increases by two days. 
C)  The average payment period increases. 
D)  All of the options will decrease the operating cycle.

Question 8

The financing policy that will result in investing in marketable securities when asset requirements are low is referred to as:

Accepted Answer

A)  compromise financing. 
B)  restrictive financing. 
C)  flexible financing. 
D)  none of the options. 
A)  compromise financing. 
B)  restrictive financing. 
C)  flexible financing. 
D)  none of the options.

Question 9

All of the following are examples of carrying costs EXCEPT:

Accepted Answer

A)  rental payments on buildings where the business is located. 
B)  the lost sale if the company runs out of a particular model. 
C)  the opportunity costs associated with having capital tied up in current assets instead of more productive fixed assets. 
D)  All of the options are examples of carrying costs. 
A)  rental payments on buildings where the business is located. 
B)  the lost sale if the company runs out of a particular model. 
C)  the opportunity costs associated with having capital tied up in current assets instead of more productive fixed assets. 
D)  All of the options are examples of carrying costs.

Question 10

Which of these is a short-term loan secured by a company's assets?

Accepted Answer

A)  Commercial loan 
B)  Line of credit 
C)  Asset-based loan 
D)  Inventory loan 
A)  Commercial loan 
B)  Line of credit 
C)  Asset-based loan 
D)  Inventory loan

Question 11

Reese's Resources faces a smooth annual demand for cash of $15 million,incurs transaction costs of $125 every time they sell marketable securities,and can earn 4.5 percent on their marketable securities.What will be their optimal cash replenishment level?

Accepted Answer

A)  $28,867.51 
B)  $288,675.13 
C)  $61,237.24 
D)  $6,123.72 
A)  $28,867.51 
B)  $288,675.13 
C)  $61,237.24 
D)  $6,123.72

Question 12

Would it be worth it to incur a compensating balance of $9,000 in order to get a 0.70 percent lower interest rate on a 1-year,pure discount loan of $250,000?

Accepted Answer

A)  Yes 
B)  No 
C)  Not enough information is given to determine 
A)  Yes 
B)  No 
C)  Not enough information is given to determine

Question 13

Suppose that Mack Industries has annual sales of $10 million,cost of goods sold of $6.5 million,average inventories of $1 million,and average accounts receivable of $600,000.Assuming that all of Mack's sales are on credit,what will be the firm's operating cycle?

Accepted Answer

A)  34.25 
B)  21.9 
C)  56.15 
D)  78.05 
A)  34.25 
B)  21.9 
C)  56.15 
D)  78.05

Question 14

Which of the following is the technique for reducing collection float by having funds sent to several geographically situated regional banks and then transferring to a main concentration account in another bank?

Accepted Answer

A)  Lockbox system 
B)  Concentration banking 
C)  Wire transfers 
D)  Collection float 
A)  Lockbox system 
B)  Concentration banking 
C)  Wire transfers 
D)  Collection float

Question 15

If a firm has a cash cycle of 41 days and an operating cycle of 76 days,what is its average payment period?

Accepted Answer

A)  52 days 
B)  29 days 
C)  117 days 
D)  35 days 
A)  52 days 
B)  29 days 
C)  117 days 
D)  35 days

Question 16

Betty Boop has saved enough money to go back to grad school.She is planning to put the money in a money market account where it will earn 2.5 percent.If she anticipates slowly drawing the money out over the course of her time in grad school at a constant rate of $29,000 per year,but is charged a commission of $7.95 every time she sells shares,how much should she take out of the mutual fund at a time?

Accepted Answer

A)  $4,589.52 
B)  $4,437.04 
C)  $4,294.65 
D)  $4,101.83 
A)  $4,589.52 
B)  $4,437.04 
C)  $4,294.65 
D)  $4,101.83

Question 17

CJ Enterprises estimates that it takes,on average,three days for their customers' payments to reach them,one day for the payments to be processed and deposited by their bookkeeping department,and two more days for the check to clear once they're deposited.What is their collection float?

Accepted Answer

A)  6 days 
B)  5 days 
C)  4 days 
D)  3 days 
A)  6 days 
B)  5 days 
C)  4 days 
D)  3 days

Question 18

The inventory order quantity that minimizes total holding and ordering costs is which of the following?

Accepted Answer

A)  Barabus economic order quantity (EOQ) 
B)  Cornett economic order quantity (EOQ) 
C)  Operations management 
D)  Production management 
A)  Barabus economic order quantity (EOQ) 
B)  Cornett economic order quantity (EOQ) 
C)  Operations management 
D)  Production management

Question 19

All of the following are examples of carrying costs EXCEPT

Accepted Answer

A)  rental payments on storage facilities where inventory is maintained. 
B)  the lost sale if the company runs out of a particular model. 
C)  the opportunity costs associated with having capital tied up in current assets instead of more productive fixed assets. 
D)  All of these choices are correct. 
A)  rental payments on storage facilities where inventory is maintained. 
B)  the lost sale if the company runs out of a particular model. 
C)  the opportunity costs associated with having capital tied up in current assets instead of more productive fixed assets. 
D)  All of these choices are correct.

Question 20

Suppose your firm is seeking a 3-year,amortizing $300,000 loan with annual payments and your bank is offering you the choice between a $305,000 loan with a $5,000 compensating balance and a $300,000 loan without a compensating balance.If the interest rate on the $300,000 loan is 8 percent,how low would the interest rate on the loan with the compensating balance have to be in order for you to choose it?

Accepted Answer

A)  8 percent 
B)  7.09 percent 
C)  1.67 percent 
D)  7.98 percent 
A)  8 percent 
B)  7.09 percent 
C)  1.67 percent 
D)  7.98 percent

If a firm has a cash cycle of 25 days and an operating cycle of 80 days,what is its payables turnover?

Suppose that LilyMac Photography has annual sales of $218,000,cost of goods sold of $123,000,average inventories of $1,250,and average accounts receivable of $22,000.Assuming that all of LilyMac's sales are on credit,what will be the firm's operating cycle?

CM Enterprises estimates that it takes,on average,seven days for their customers' payments to reach them,one day for the payments to be processed and deposited by their bookkeeping department,and three more days for the check to clear once they're deposited.What is their collection float?

If a firm has a cash cycle of 38 days and an operating cycle of 82 days,what is its payables turnover?

If a firm has a cash cycle of 47 days and an operating cycle of 92 days,what is its average payment period?

Which of the following will decrease the operating cycle?

The financing policy that will result in investing in marketable securities when asset requirements are low is referred to as:

All of the following are examples of carrying costs EXCEPT:

Which of these is a short-term loan secured by a company's assets?

Reese's Resources faces a smooth annual demand for cash of $15 million,incurs transaction costs of $125 every time they sell marketable securities,and can earn 4.5 percent on their marketable securities.What will be their optimal cash replenishment level?

Would it be worth it to incur a compensating balance of $9,000 in order to get a 0.70 percent lower interest rate on a 1-year,pure discount loan of $250,000?

Suppose that Mack Industries has annual sales of $10 million,cost of goods sold of $6.5 million,average inventories of $1 million,and average accounts receivable of $600,000.Assuming that all of Mack's sales are on credit,what will be the firm's operating cycle?

Which of the following is the technique for reducing collection float by having funds sent to several geographically situated regional banks and then transferring to a main concentration account in another bank?

If a firm has a cash cycle of 41 days and an operating cycle of 76 days,what is its average payment period?

CJ Enterprises estimates that it takes,on average,three days for their customers' payments to reach them,one day for the payments to be processed and deposited by their bookkeeping department,and two more days for the check to clear once they're deposited.What is their collection float?

The inventory order quantity that minimizes total holding and ordering costs is which of the following?

All of the following are examples of carrying costs EXCEPT

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Filters

Exam 14: Working Capital Management and Policies

If a firm has a cash cycle of 25 days and an operating cycle of 80 days,what is its payables turnover?

Suppose that LilyMac Photography has annual sales of $218,000,cost of goods sold of $123,000,average inventories of $1,250,and average accounts receivable of $22,000.Assuming that all of LilyMac's sales are on credit,what will be the firm's operating cycle?

CM Enterprises estimates that it takes,on average,seven days for their customers' payments to reach them,one day for the payments to be processed and deposited by their bookkeeping department,and three more days for the check to clear once they're deposited.What is their collection float?

If a firm has a cash cycle of 38 days and an operating cycle of 82 days,what is its payables turnover?

If a firm has a cash cycle of 47 days and an operating cycle of 92 days,what is its average payment period?

Which of the following will decrease the operating cycle?

The financing policy that will result in investing in marketable securities when asset requirements are low is referred to as:

All of the following are examples of carrying costs EXCEPT:

Which of these is a short-term loan secured by a company's assets?

Reese's Resources faces a smooth annual demand for cash of $15 million,incurs transaction costs of $125 every time they sell marketable securities,and can earn 4.5 percent on their marketable securities.What will be their optimal cash replenishment level?

Would it be worth it to incur a compensating balance of $9,000 in order to get a 0.70 percent lower interest rate on a 1-year,pure discount loan of $250,000?

Suppose that Mack Industries has annual sales of $10 million,cost of goods sold of $6.5 million,average inventories of $1 million,and average accounts receivable of $600,000.Assuming that all of Mack's sales are on credit,what will be the firm's operating cycle?

Which of the following is the technique for reducing collection float by having funds sent to several geographically situated regional banks and then transferring to a main concentration account in another bank?

If a firm has a cash cycle of 41 days and an operating cycle of 76 days,what is its average payment period?

CJ Enterprises estimates that it takes,on average,three days for their customers' payments to reach them,one day for the payments to be processed and deposited by their bookkeeping department,and two more days for the check to clear once they're deposited.What is their collection float?

The inventory order quantity that minimizes total holding and ordering costs is which of the following?

All of the following are examples of carrying costs EXCEPT

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Filters