Question 1

Lowering a firm's credit standards or customer credit quality will cause the average collection period to lengthen.

Accepted Answer

A) True 
 B)False  True

Question 2

Examples of regular cash outflows would not include:

Accepted Answer

A) materials purchases 
B) rent 
C) utility bills 
D) all the above are regular cash outflows 
A) materials purchases 
B) rent 
C) utility bills 
D) all the above are regular cash outflows D

Question 3

Cash disbursements may include all of the following EXCEPT

Accepted Answer

A) tax payments 
B) rent payments 
C) depreciation expense 
D) fixed asset outlays 
A) tax payments 
B) rent payments 
C) depreciation expense 
D) fixed asset outlays C

Question 4

A risk which results from a firm's inability to meet currently maturing obligations is often referred to as: Not in the chapter

Accepted Answer

A) liquidity risk 
B) purchasing power risk 
C) interest rate risk 
D) financial leverage risk 
A) liquidity risk 
B) purchasing power risk 
C) interest rate risk 
D) financial leverage risk

Question 5

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 6

The projections on a cash budget will reflect all of the following except:

Accepted Answer

A) the firm's marketing effort. 
B) the firm's credit policies. 
C) how the firm manages its receivables 
D) All of the statements above are correct. 
A) the firm's marketing effort. 
B) the firm's credit policies. 
C) how the firm manages its receivables 
D) All of the statements above are correct.

Question 7

The willingness of a credit applicant to pay her or his bills is measured by:

Accepted Answer

A) capacity 
B) capital 
C) conditions 
D) character 
E) collateral 
A) capacity 
B) capital 
C) conditions 
D) character 
E) collateral

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

The objective of managing current assets and liabilities is to None of the above clone of prior item.

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 detracts from 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 detracts from the firm's value. 
D) achieve as high a level of current liabilities as possible. 
E) none of the above

Question 10

A negotiable CD is a marketable receipt issued by a bank in exchange for a deposit of funds.

Accepted Answer

A) True 
 B)False

Question 11

An increase in the cash conversion cycle would lead to an increase in the firm's short-term needs and financing costs.

Accepted Answer

A) True 
 B)False

Question 12

Ningbo shipping has projected sales in May, June, and July of $500, $600, and $700, respectively.It makes 20 percent of sales for cash and collects the balance one month following the sale.Ningbo Shipping's total cash receipts in July are

Accepted Answer

A) $220620 
B) $200520 
C) $180680 
D) none of the above 
A) $220620 
B) $200520 
C) $180680 
D) none of the above

Question 13

The current ratio concept is particularly useful in: Not in the chapter

Accepted Answer

A) analyzing large firms 
B) comparing the financial positions of firms of varying sizes 
C) examining firms with large seasonal sales 
D) comparing the financial structures of firms of varying sizes 
A) analyzing large firms 
B) comparing the financial positions of firms of varying sizes 
C) examining firms with large seasonal sales 
D) comparing the financial structures of firms of varying sizes

Question 14

An inverted yield curve is upward sloping.

Accepted Answer

A) True 
 B)False

Question 15

BP has an operating cycle of 120 150 days, an average collection period of 40 days, and an average payment period of 30 20 days.Based on this information, BPs average age of inventory is ________ days.

Accepted Answer

A) 50130 
B) 60 
C) 7090 
D) 80110 
E) none of the above 
A) 50130 
B) 60 
C) 7090 
D) 80110 
E) none of the above

Question 16

All businesses can earn interest at the prime rate on funds in their checking accounts.

Accepted Answer

A) True 
 B)False

Question 17

A cash budget is a tool the treasurer uses to forecast future cash flows and estimate future short-term borrowing needs.

Accepted Answer

A) True 
 B)False

Question 18

The key input to the short-run financial planning process is easiest to estimate is Not in the chapter

Accepted Answer

A) cash sales. 
B) cash receipts. 
C) cash disbursements. 
D) the amount of month to month short term borrowing. 
A) cash sales. 
B) cash receipts. 
C) cash disbursements. 
D) the amount of month to month short term borrowing.

Question 19

In general, the less net working capital a company has

Accepted Answer

A) the greater the risk. 
B) the lower the risk. 
C) the less likely creditors will lend to the firm. 
D) none of the above 
A) the greater the risk. 
B) the lower the risk. 
C) the less likely creditors will lend to the firm. 
D) none of the above

Question 20

In June, Erie Plastics had an ending cash balance of $55,000.In July, the firm had total cash receipts of $70,000 and total cash disbursements of $10,000.The minimum cash balance required by the firm is $25,000.At the end of July, Erie Plastics had

Accepted Answer

A) an excess cash balance of $9025,000 
B) aAn excess cash balance of $0 
C) an excess cash balance of required financing of $1150,000 
D) required financing of $25,000 
E) none of the above 
A) an excess cash balance of $9025,000 
B) aAn excess cash balance of $0 
C) an excess cash balance of required financing of $1150,000 
D) required financing of $25,000 
E) none of the above

Lowering a firm's credit standards or customer credit quality will cause the average collection period to lengthen.

Examples of regular cash outflows would not include:

Cash disbursements may include all of the following EXCEPT

A risk which results from a firm's inability to meet currently maturing obligations is often referred to as: Not in the chapter

A negative cash conversion cycle indicates that the

The projections on a cash budget will reflect all of the following except:

The willingness of a credit applicant to pay her or his bills is measured by:

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

The objective of managing current assets and liabilities is to None of the above clone of prior item.

A negotiable CD is a marketable receipt issued by a bank in exchange for a deposit of funds.

An increase in the cash conversion cycle would lead to an increase in the firm's short-term needs and financing costs.

Ningbo shipping has projected sales in May, June, and July of $500, $600, and $700, respectively.It makes 20 percent of sales for cash and collects the balance one month following the sale.Ningbo Shipping's total cash receipts in July are

The current ratio concept is particularly useful in: Not in the chapter

An inverted yield curve is upward sloping.

BP has an operating cycle of 120 150 days, an average collection period of 40 days, and an average payment period of 30 20 days.Based on this information, BPs average age of inventory is ________ days.

All businesses can earn interest at the prime rate on funds in their checking accounts.

A cash budget is a tool the treasurer uses to forecast future cash flows and estimate future short-term borrowing needs.

The key input to the short-run financial planning process is easiest to estimate is Not in the chapter

In general, the less net working capital a company has

In June, Erie Plastics had an ending cash balance of $55,000.In July, the firm had total cash receipts of $70,000 and total cash disbursements of $10,000.The minimum cash balance required by the firm is $25,000.At the end of July, Erie Plastics had

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

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Exam 15: Managing Working Capital

Lowering a firm's credit standards or customer credit quality will cause the average collection period to lengthen.

Examples of regular cash outflows would not include:

Cash disbursements may include all of the following EXCEPT

A risk which results from a firm's inability to meet currently maturing obligations is often referred to as: Not in the chapter

A negative cash conversion cycle indicates that the

The projections on a cash budget will reflect all of the following except:

The willingness of a credit applicant to pay her or his bills is measured by:

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

The objective of managing current assets and liabilities is to None of the above clone of prior item.

A negotiable CD is a marketable receipt issued by a bank in exchange for a deposit of funds.

An increase in the cash conversion cycle would lead to an increase in the firm's short-term needs and financing costs.

Ningbo shipping has projected sales in May, June, and July of $500, $600, and $700, respectively.It makes 20 percent of sales for cash and collects the balance one month following the sale.Ningbo Shipping's total cash receipts in July are

The current ratio concept is particularly useful in: Not in the chapter

An inverted yield curve is upward sloping.

BP has an operating cycle of 120 150 days, an average collection period of 40 days, and an average payment period of 30 20 days.Based on this information, BPs average age of inventory is ________ days.

All businesses can earn interest at the prime rate on funds in their checking accounts.

A cash budget is a tool the treasurer uses to forecast future cash flows and estimate future short-term borrowing needs.

The key input to the short-run financial planning process is easiest to estimate is Not in the chapter

In general, the less net working capital a company has

In June, Erie Plastics had an ending cash balance of $55,000.In July, the firm had total cash receipts of $70,000 and total cash disbursements of $10,000.The minimum cash balance required by the firm is $25,000.At the end of July, Erie Plastics had

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