Question 1

The cash conversion cycle is found within the:

Accepted Answer

A)  Operating period 
B)  Accounts payable period 
C)  Average collection period 
D)  Holding period 
A)  Operating period 
B)  Accounts payable period 
C)  Average collection period 
D)  Holding period A

Question 2

The length of time it takes a buyer to acquire,process,and sell the inventory is the:

Accepted Answer

A)  Receivables Cycle 
B)  Receivables Period 
C)  Inventory Cycle 
D)  Inventory Period 
A)  Receivables Cycle 
B)  Receivables Period 
C)  Inventory Cycle 
D)  Inventory Period D

Question 3

The optimal ordering quantity for a company is 350.If the carrying cost per item is $2.50 and the cost per order is $18,what is the number of total sales expected for the year?

Accepted Answer

A)  7,516 
B)  5,314 
C)  10,305 
D)  8,507 
E)  6,924 
A)  7,516 
B)  5,314 
C)  10,305 
D)  8,507 
E)  6,924 D

Question 4

Which of the following is not considered a cost for administering the accounts receivable?

Accepted Answer

A)  analyzing credit 
B)  increased holdings 
C)  sending out bills 
D)  collecting past due accounts 
A)  analyzing credit 
B)  increased holdings 
C)  sending out bills 
D)  collecting past due accounts

Question 5

What is the percentage holding cost per period for a credit with the terms of 2/30 net 60?

Accepted Answer

A)  0.0101 
B)  0.2787 
C)  0.0667 
D)  0.0204 
E)  0.0352 
A)  0.0101 
B)  0.2787 
C)  0.0667 
D)  0.0204 
E)  0.0352

Question 6

Each of the following is a decision that can be avoided if a firm refuses to offer credit EXCEPT:

Accepted Answer

A)  Collection period 
B)  Discounts to give fast payers 
C)  Accounts Payable 
D)  Who to extend credit to 
A)  Collection period 
B)  Discounts to give fast payers 
C)  Accounts Payable 
D)  Who to extend credit to

Question 7

All of the following are forms of short term financing EXCEPT:

Accepted Answer

A)  Receivable financing 
B)  Inventory financing 
C)  Lines of Credit 
D)  Self-liquidating loans 
A)  Receivable financing 
B)  Inventory financing 
C)  Lines of Credit 
D)  Self-liquidating loans

Question 8

The ________ motive for holding cash is the need for a safety supply to act as a financial reserve against unexpected events.

Accepted Answer

A)  Transactional 
B)  Precautionary 
C)  Speculative 
D)  Intuitive 
A)  Transactional 
B)  Precautionary 
C)  Speculative 
D)  Intuitive

Question 9

A company is offering a discount with terms 3/15 net 40.What is the discount rate associated with this offer?

Accepted Answer

A)  3% 
B)  15% 
C)  40% 
D)  20% 
E)  5% 
A)  3% 
B)  15% 
C)  40% 
D)  20% 
E)  5%

Question 10

Inventory carrying costs include all of the following EXCEPT

Accepted Answer

A)  storage costs. 
B)  the cost of financing the inventory investment. 
C)  the cost of taking trade discounts. 
D)  insurance. 
E)  damage and theft costs. 
A)  storage costs. 
B)  the cost of financing the inventory investment. 
C)  the cost of taking trade discounts. 
D)  insurance. 
E)  damage and theft costs.

Question 11

The ________ is the time it takes to acquire and sell the inventory.

Accepted Answer

A)  collection period 
B)  turnover 
C)  inventory period 
D)  operating period 
A)  collection period 
B)  turnover 
C)  inventory period 
D)  operating period

Question 12

What is an advantage of short term lending for banks?

Accepted Answer

A)  New fees every loan 
B)  More flexibility 
C)  Locked in rates 
D)  Increased clients 
A)  New fees every loan 
B)  More flexibility 
C)  Locked in rates 
D)  Increased clients

Question 13

The annualized interest rate that is realized when not taking advantage of a possible cash discount is known as:

Accepted Answer

A)  High cost financing 
B)  Low cost financing 
C)  The effective interest rate 
D)  The flat rate 
A)  High cost financing 
B)  Low cost financing 
C)  The effective interest rate 
D)  The flat rate

Question 14

The firm borrows a portion of the value of its inventory and pays off the loan from the proceeds generated by selling the inventory.This is known as:

Accepted Answer

A)  Inventory financing 
B)  Receivable financing 
C)  Sales financing 
D)  Liquidation financing 
A)  Inventory financing 
B)  Receivable financing 
C)  Sales financing 
D)  Liquidation financing

Question 15

Net float equals

Accepted Answer

A)  disbursement float + collection float. 
B)  the available balance − the firm's book balance. 
C)  disbursement float − collection float − the firm's book balance. 
D)  disbursement float − collection float. 
E)  disbursement float + collection float − the firm's available balance. 
A)  disbursement float + collection float. 
B)  the available balance − the firm's book balance. 
C)  disbursement float − collection float − the firm's book balance. 
D)  disbursement float − collection float. 
E)  disbursement float + collection float − the firm's available balance.

Question 16

If a company has not had prior experience with a client,where might they obtain the credit information?

Accepted Answer

A)  Rating Companies 
B)  5 C's 
C)  Complex Programs 
D)  Friends and family 
A)  Rating Companies 
B)  5 C's 
C)  Complex Programs 
D)  Friends and family

Question 17

365 / Receivables Turnover =

Accepted Answer

A)  Payment Period 
B)  Collection Period 
C)  Operating Period 
D)  Receivables Period 
E)  Payables Period 
A)  Payment Period 
B)  Collection Period 
C)  Operating Period 
D)  Receivables Period 
E)  Payables Period

Question 18

If a firm uses the EOQ model to manage its inventory and its managers decide to hold safety stock,its

Accepted Answer

A)  reorder costs will fall. 
B)  processing costs will fall. 
C)  orders will be less frequent. 
D)  shortage costs will rise. 
E)  first order is increased to include the extra number of units sold. 
A)  reorder costs will fall. 
B)  processing costs will fall. 
C)  orders will be less frequent. 
D)  shortage costs will rise. 
E)  first order is increased to include the extra number of units sold.

Question 19

What does a self-liquidating bank loan mean?

Accepted Answer

A)  The loan pays of itself. 
B)  The loan is received in cash only. 
C)  The loan is used to purchase assets that are worth more than the loan. 
D)  The loan is used to finance an asset that will pay off the loans. 
A)  The loan pays of itself. 
B)  The loan is received in cash only. 
C)  The loan is used to purchase assets that are worth more than the loan. 
D)  The loan is used to finance an asset that will pay off the loans.

Question 20

The time the vendor gives us to pay is:

Accepted Answer

A)  Cash conversion cycle 
B)  Receivables turnover 
C)  Accounts payable period 
D)  Operating period 
A)  Cash conversion cycle 
B)  Receivables turnover 
C)  Accounts payable period 
D)  Operating period

The cash conversion cycle is found within the:

The length of time it takes a buyer to acquire,process,and sell the inventory is the:

The optimal ordering quantity for a company is 350.If the carrying cost per item is $2.50 and the cost per order is $18,what is the number of total sales expected for the year?

Which of the following is not considered a cost for administering the accounts receivable?

What is the percentage holding cost per period for a credit with the terms of 2/30 net 60?

Each of the following is a decision that can be avoided if a firm refuses to offer credit EXCEPT:

All of the following are forms of short term financing EXCEPT:

The ________ motive for holding cash is the need for a safety supply to act as a financial reserve against unexpected events.

A company is offering a discount with terms 3/15 net 40.What is the discount rate associated with this offer?

Inventory carrying costs include all of the following EXCEPT

The ________ is the time it takes to acquire and sell the inventory.

What is an advantage of short term lending for banks?

The annualized interest rate that is realized when not taking advantage of a possible cash discount is known as:

The firm borrows a portion of the value of its inventory and pays off the loan from the proceeds generated by selling the inventory.This is known as:

Net float equals

If a company has not had prior experience with a client,where might they obtain the credit information?

365 / Receivables Turnover =

If a firm uses the EOQ model to manage its inventory and its managers decide to hold safety stock,its

What does a self-liquidating bank loan mean?

The time the vendor gives us to pay is:

Overview of Finance

Financial Statements and Ratio Analysis

Time Value of Money - Introduction

Time Value of Money - Streams and Valuations

Risk and Return - Introduction

Portfolio Theory

Interest Rates and Bond Valuation

Stock Valuation and Market Efficiency

Capital Budgeting Techniques

Capital Budgeting - Cash Flows

Cost of Capital

Capital Structure

Dividends, repurchases, and Splits

Financial Planning

International Finance

Filters

Exam 15: The Management of Working Capital

The cash conversion cycle is found within the:

The length of time it takes a buyer to acquire,process,and sell the inventory is the:

The optimal ordering quantity for a company is 350.If the carrying cost per item is $2.50 and the cost per order is $18,what is the number of total sales expected for the year?

Which of the following is not considered a cost for administering the accounts receivable?

What is the percentage holding cost per period for a credit with the terms of 2/30 net 60?

Each of the following is a decision that can be avoided if a firm refuses to offer credit EXCEPT:

All of the following are forms of short term financing EXCEPT:

The ________ motive for holding cash is the need for a safety supply to act as a financial reserve against unexpected events.

A company is offering a discount with terms 3/15 net 40.What is the discount rate associated with this offer?

Inventory carrying costs include all of the following EXCEPT

The ________ is the time it takes to acquire and sell the inventory.

What is an advantage of short term lending for banks?

The annualized interest rate that is realized when not taking advantage of a possible cash discount is known as:

The firm borrows a portion of the value of its inventory and pays off the loan from the proceeds generated by selling the inventory.This is known as:

Net float equals

If a company has not had prior experience with a client,where might they obtain the credit information?

365 / Receivables Turnover =

If a firm uses the EOQ model to manage its inventory and its managers decide to hold safety stock,its

What does a self-liquidating bank loan mean?

The time the vendor gives us to pay is:

Overview of Finance

Financial Statements and Ratio Analysis

Time Value of Money - Introduction

Time Value of Money - Streams and Valuations

Risk and Return - Introduction

Portfolio Theory

Interest Rates and Bond Valuation

Stock Valuation and Market Efficiency

Capital Budgeting Techniques

Capital Budgeting - Cash Flows

Cost of Capital

Capital Structure

Dividends, repurchases, and Splits

Financial Planning

International Finance

Filters