Exam 24: Working Capital Management: Current Assets and Current Liabilities

Explain how revolving loans work and how they are beneficial to firms who are trying to minimize their cost of borrowing and manage their short-term financing so that they do not become illiquid.

Which of the following scenarios is an example of the speculative motive to hold cash?

The credit terms offered to a customer include all the following except:

What is credit analysis? When is it done? And, generally, what are the steps involved in the process?

A factoring company is:

Which firms can maintain a higher portion of their liquidity in marketable securities and less in cash?

McGill Inc.is considering adopting a new credit policy of 3/10 net 30 instead of net 30 days.The firm estimates that 30 percent of the customers will take advantage of the discount, while the remaining 70 percent will pay on day 30.The selling price is $85 per unit and the unit sales are estimated to be 9,000 per year.The after-tax discount rate is 5% and the tax rate is 40%.Should the firm switch to the new policy?

Which of the following is/are alternatives to paying with a cheque?

Discuss the limitation of the inventory turnover ratio as an effective inventory management tool.

A firm taking a conservative approach with respect to its cash balance is most likely to be:

Inventory consists of:

All of the following are components of float except:

When credit is granted to a firm, it is called:

If the current credit policy is 3/30 net 60, which of the following loosens the credit policy?

A company's trade credit decision is largely set by all of the following criteria except

The following pairs are all benefits of holding inventory except:

Which of the following scenarios are examples of credit enhancements?

The level of a firm's investment in marketable securities is dictated by its:

In the case of delayed or non-payment, describe in detail the general steps that firms must take in an attempt to force payment or recover as much value as possible from the defaulting customer or customers.

The main premise to good cash management is: