Exam 22: Managing the Firms Assets

The cash conversion period is the time period between ordering inventory and receiving cash for its sale.

Which of the following is not directly involved in a firm's management of its working capital?

An understanding of the present value of a future dollar is important when one is using

The payback period technique measures how long it will take to recover the initial cash outlay of an investment.

Net working capital includes cash and accounts receivable, among other things.

Capital budgeting primarily involves short-term decisions on the part of management.

The net present value method discounts future after-tax profits back to the present day.

Cash deposits during a month less checks written during the same period equal

The Internal Rate of Return (IRR) method

Aging accounts receivable can indicate troublesome accounts.

The payback period technique shows the number of years it will take to recover the cash outlay of an investment.

The net present value method takes the time value of money into account in evaluating an investment.

Improperly managed stockpiling is harmful to cash flow and should be minimized if possible.

The net present value (NPV) technique estimates the current value of the cash that will flow into the firm in the future and deducts the initial outlay.

Identify the stages of the life cycle of receivables. Why is it so important to recognize these stages?

Which of the following is not an asset used to calculate net operating working capital?

The internal rate of return method estimates the rate of return that can be expected from a contemplated investment.

The limited use of discounted cash flow tools by a small firm probably has more to do with the nature of the small firm itself than it does with the owners' willingness to learn.

Failure to take cash discounts from suppliers

Working-capital management focuses on the attractiveness of long-run investment opportunities.