Question 1

A mercantile credit bureau serves primarily as a (n):

Accepted Answer

A) collection agency for delinquent accounts 
B) common meeting place where credit managers may exchange information 
C) organization through which accounts receivable may be sold to other businesses 
D) central record-keeping organization for credit information on business firms 
A) collection agency for delinquent accounts 
B) common meeting place where credit managers may exchange information 
C) organization through which accounts receivable may be sold to other businesses 
D) central record-keeping organization for credit information on business firms D

Question 2

BP has an operating cycle of 120 days,an average collection period of 40 days,and an average payment period of 30 days.Based on this information,BPs average age of inventory is ________ days.

Accepted Answer

A) 50 
B) 60 
C) 70 
D) 80 
E) none of the above 
A) 50 
B) 60 
C) 70 
D) 80 
E) none of the above E

Question 3

A firm's excess cash balance during a particular month could be best deployed if it were

Accepted Answer

A) financed with short term investments 
B) financed with long term investments 
C) invested in short term investments 
D) invested in long term investments 
E) none of the above 
A) financed with short term investments 
B) financed with long term investments 
C) invested in short term investments 
D) invested in long term investments 
E) none of the above C

Question 4

A negative cash conversion cycle indicates that the

Accepted Answer

A) operating cycle exceeds the average payment period. 
B) average payment period exceeds the operating cycle. 
C) firm is shortening its average payment period and lengthening its average collection period. 
D) lengthening its average collection period and lengthening its inventory period. 
E) none of above are correct 
A) operating cycle exceeds the average payment period. 
B) average payment period exceeds the operating cycle. 
C) firm is shortening its average payment period and lengthening its average collection period. 
D) lengthening its average collection period and lengthening its inventory period. 
E) none of above are correct

Question 5

Ithaca Iron has annual operating outlays of $1,800,000 and a cash conversion cycle of 60 days.If the firm currently pays 12 percent for negotiated financing and reduces its cash conversion cycle to 50 days,the annual savings is

Accepted Answer

A) $60,000. 
B) $10,000. 
C) $6,000. 
D) $16,000. 
E) none of above are correct 
A) $60,000. 
B) $10,000. 
C) $6,000. 
D) $16,000. 
E) none of above are correct

Question 6

The federal funds rate is normally several points lower than the Treasury Bill rate.

Accepted Answer

A) True 
 B)False

Question 7

BP has an average age of inventory of 60 days,an average collection period of 45 days,and an average payment period of 30 days.Based on this information,BPs cash conversion cycle is ________ days.

Accepted Answer

A) 25 
B) 35 
C) 45 
D) 55 
E) none of the above 
A) 25 
B) 35 
C) 45 
D) 55 
E) none of the above

Question 8

The inventory period may be calculated as sales divided by inventories.

Accepted Answer

A) True 
 B)False

Question 9

Marketable securities are held primarily to meet:

Accepted Answer

A) transactions motives 
B) precautionary motives 
C) speculative motives 
D) leverage motives 
A) transactions motives 
B) precautionary motives 
C) speculative motives 
D) leverage motives

Question 10

The operating cycle can be reduced by lengthening the accounts payable period.

Accepted Answer

A) True 
 B)False

Question 11

The operating cycle measures the time it takes between ordering materials and collecting cash from receivables.

Accepted Answer

A) True 
 B)False

Question 12

Business firms hold cash and marketable securities for which of the following reasons or motives?

Accepted Answer

A) transactions,precautionary,and goodwill motives 
B) precautionary,speculative,and goodwill motives 
C) transactions,precautionary,and speculative motives 
D) precautionary,goodwill,and transactions motives 
A) transactions,precautionary,and goodwill motives 
B) precautionary,speculative,and goodwill motives 
C) transactions,precautionary,and speculative motives 
D) precautionary,goodwill,and transactions motives

Question 13

Firms may not sell marketable securities to cover cash shortfalls.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) decrease;increases;increasing 
B) decrease;decreases;reducing 
C) increase;decreases;increasing 
D) increase;increases;reducing 
A) decrease;increases;increasing 
B) decrease;decreases;reducing 
C) increase;decreases;increasing 
D) increase;increases;reducing

Question 15

The transaction motive for holding cash is the demand for cash needed to take advantage of unusual cash discounts for needed materials.

Accepted Answer

A) True 
 B)False

Question 16

The objective of managing current assets and liabilities is to

Accepted Answer

A) achieve as low a level of current assets as possible. 
B) achieve as low a level of current liabilities as possible. 
C) achieve a balance between profitability and risk that contributes to the firm's value. 
D) achieve as high a level of current liabilities as possible. 
E) none of the above 
A) achieve as low a level of current assets as possible. 
B) achieve as low a level of current liabilities as possible. 
C) achieve a balance between profitability and risk that contributes to the firm's value. 
D) achieve as high a level of current liabilities as possible. 
E) none of the above

Question 17

Which of the following statements is most correct?

Accepted Answer

A) The financial crisis and recession of 2007-2009 had little effect on the ability of borrower firms to obtain short-term financing and for firms with surplus funds to invest in short-term instruments. 
B) The financial crisis and recession of 2007-2009 had strong effects on the ability of borrower firms to obtain short-term financing and for firms with surplus funds to invest in short-term instruments. 
C) The financial crisis and recession of 2007-2009 had strong effects on the ability of borrower firms to obtain short-term financing but made it easy for firms with surplus funds to invest in short-term instruments. 
D) The financial crisis and recession of 2007-2009 had little effect on the ability of borrower firms to obtain short-term financing but made it easy for firms with surplus funds to invest in short-term instruments. 
E) none of the above 
A) The financial crisis and recession of 2007-2009 had little effect on the ability of borrower firms to obtain short-term financing and for firms with surplus funds to invest in short-term instruments. 
B) The financial crisis and recession of 2007-2009 had strong effects on the ability of borrower firms to obtain short-term financing and for firms with surplus funds to invest in short-term instruments. 
C) The financial crisis and recession of 2007-2009 had strong effects on the ability of borrower firms to obtain short-term financing but made it easy for firms with surplus funds to invest in short-term instruments. 
D) The financial crisis and recession of 2007-2009 had little effect on the ability of borrower firms to obtain short-term financing but made it easy for firms with surplus funds to invest in short-term instruments. 
E) none of the above

Question 18

___________ are short-term money market investments that are extremely safe and liquid;they can be quickly converted into cash at values very close to their intrinsic values.

Accepted Answer

A) preferred stocks. 
B) treasury bonds. 
C) corporate bonds. 
D) marketable securities. 
E) none of above are correct 
A) preferred stocks. 
B) treasury bonds. 
C) corporate bonds. 
D) marketable securities. 
E) none of above are correct

Question 19

The disbursement float is the delay in transferring the means of payment from the payor (customer)to the payee (the provider of goods or services).

Accepted Answer

A) True 
 B)False

Question 20

A firm with an inventory period of 30 days,an accounts receivable period of 30 days,and an accounts payable period of 90 days has an operating cycle of _____ days.

Accepted Answer

A) 60 
B) -60 
C) 30 
D) -30 
A) 60 
B) -60 
C) 30 
D) -30

A mercantile credit bureau serves primarily as a (n):

BP has an operating cycle of 120 days,an average collection period of 40 days,and an average payment period of 30 days.Based on this information,BPs average age of inventory is ________ days.

A firm's excess cash balance during a particular month could be best deployed if it were

A negative cash conversion cycle indicates that the

Ithaca Iron has annual operating outlays of $1,800,000 and a cash conversion cycle of 60 days.If the firm currently pays 12 percent for negotiated financing and reduces its cash conversion cycle to 50 days,the annual savings is

The federal funds rate is normally several points lower than the Treasury Bill rate.

BP has an average age of inventory of 60 days,an average collection period of 45 days,and an average payment period of 30 days.Based on this information,BPs cash conversion cycle is ________ days.

The inventory period may be calculated as sales divided by inventories.

Marketable securities are held primarily to meet:

The operating cycle can be reduced by lengthening the accounts payable period.

The operating cycle measures the time it takes between ordering materials and collecting cash from receivables.

Business firms hold cash and marketable securities for which of the following reasons or motives?

Firms may not sell marketable securities to cover cash shortfalls.

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

The transaction motive for holding cash is the demand for cash needed to take advantage of unusual cash discounts for needed materials.

The objective of managing current assets and liabilities is to

Which of the following statements is most correct?

___________ are short-term money market investments that are extremely safe and liquid;they can be quickly converted into cash at values very close to their intrinsic values.

The disbursement float is the delay in transferring the means of payment from the payor (customer)to the payee (the provider of goods or services).

A firm with an inventory period of 30 days,an accounts receivable period of 30 days,and an accounts payable period of 90 days has an operating cycle of _____ days.

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Exam 15: Managing Working Capital

A mercantile credit bureau serves primarily as a (n):

BP has an operating cycle of 120 days,an average collection period of 40 days,and an average payment period of 30 days.Based on this information,BPs average age of inventory is ________ days.

A firm's excess cash balance during a particular month could be best deployed if it were

A negative cash conversion cycle indicates that the

Ithaca Iron has annual operating outlays of $1,800,000 and a cash conversion cycle of 60 days.If the firm currently pays 12 percent for negotiated financing and reduces its cash conversion cycle to 50 days,the annual savings is

The federal funds rate is normally several points lower than the Treasury Bill rate.

BP has an average age of inventory of 60 days,an average collection period of 45 days,and an average payment period of 30 days.Based on this information,BPs cash conversion cycle is ________ days.

The inventory period may be calculated as sales divided by inventories.

Marketable securities are held primarily to meet:

The operating cycle can be reduced by lengthening the accounts payable period.

The operating cycle measures the time it takes between ordering materials and collecting cash from receivables.

Business firms hold cash and marketable securities for which of the following reasons or motives?

Firms may not sell marketable securities to cover cash shortfalls.

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

The transaction motive for holding cash is the demand for cash needed to take advantage of unusual cash discounts for needed materials.

The objective of managing current assets and liabilities is to

Which of the following statements is most correct?

___________ are short-term money market investments that are extremely safe and liquid;they can be quickly converted into cash at values very close to their intrinsic values.

The disbursement float is the delay in transferring the means of payment from the payor (customer)to the payee (the provider of goods or services).

A firm with an inventory period of 30 days,an accounts receivable period of 30 days,and an accounts payable period of 90 days has an operating cycle of _____ days.

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

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