Exam 15: Managing Working Capital

Dun & Bradstreet serves as:

Speculative motives for holding cash include holding funds to meet unexpected demands.

Typically, business firms should strive to maximize their cash holdings.

In June, Erie Plastics had an ending cash balance of $35,000. In July, the firm had total cash receipts of $40,000 and total cash disbursements of $50,000. The minimum cash balance required by the firm is $25,000. At the end of July, Erie Plastics had

An inverted yield curve is upward sloping.

If the cash conversion cycle shortens, then the firm's investment in inventories and receivables will always be smaller.

If a firm has net sales of $400,000, annual cost of goods sold of $315,000, an inventory turnover of 4.5 times a year, and an accounts receivable turnover of five times a year, the combined investment in inventories and accounts receivable would be:

The account receivable period may be calculated as accounts receivable divided by daily sales.

The size of the cash buffer depends upon:

With regards to credit analysis, this refers to the current economic climate and state of the business cycle.

Fixed capital would be defined as the firm's fixed assets, which include plant, equipment and property.

Inventory / COGS per day.

A firm can reduce its cash conversion cycle by

Wells Fargo is a credit bureau.

Which one of the following is a private firm that operates as a credit-reporting agency?

A (n) ________ in current assets ________ net working capital, thereby ________ the risk of technical insolvency.

Which of the following marketable securities is sold at a discount throughout competitive bidding in a weekly auction?

A firm has a minimum desired cash balance of $10,000. Any cash shortfalls will be made up with short-term financing. The net cash flow for January is $3,000 and the beginning balance for that month is $5,000: The cash balance for the beginning of February will be:

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

A firm's cash receipts may include all of the following except