Question 1

Calculate the APR for an invoice that has the terms 1/20 net 45.

Accepted Answer

A)  14.75% 
B)  18.80% 
C)  12.25% 
D)  15.65% 
E)  10.35% 
A)  14.75% 
B)  18.80% 
C)  12.25% 
D)  15.65% 
E)  10.35%

Question 2

This kind of financing requires the firm to pledge its accounts receivables to the bank as collateral for the loan.

Accepted Answer

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

Question 3

The best source of information about a customer's credit is/are

Accepted Answer

A)  the firm's experience with the customer. 
B)  Dun and Bradstreet. 
C)  information from the customer's bank. 
D)  data from financial markets. 
E)  credit references supplied by the customer. 
A)  the firm's experience with the customer. 
B)  Dun and Bradstreet. 
C)  information from the customer's bank. 
D)  data from financial markets. 
E)  credit references supplied by the customer.

Question 4

________ is the willingness of the borrower to pay obligations owed.

Accepted Answer

A)  Capital 
B)  Character 
C)  Conditions 
D)  Capacity 
E)  Collections 
A)  Capital 
B)  Character 
C)  Conditions 
D)  Capacity 
E)  Collections

Question 5

An accounts receivable aging schedule is used to

Accepted Answer

A)  decide whether to extend credit. 
B)  determine whether legal action should be taken against a customer with a past due account. 
C)  provide information about whether the firm's prices are too low. 
D)  monitor accounts receivable. 
E)  make decisions regarding the length of time a firm should take before paying suppliers. 
A)  decide whether to extend credit. 
B)  determine whether legal action should be taken against a customer with a past due account. 
C)  provide information about whether the firm's prices are too low. 
D)  monitor accounts receivable. 
E)  make decisions regarding the length of time a firm should take before paying suppliers.

Question 6

All of the following are costs of credit EXCEPT

Accepted Answer

A)  bad debt losses. 
B)  credit analysis expenses. 
C)  lost revenues when customers do not take advantage of trade discounts. 
D)  the increased investment in accounts receivable. 
A)  bad debt losses. 
B)  credit analysis expenses. 
C)  lost revenues when customers do not take advantage of trade discounts. 
D)  the increased investment in accounts receivable.

Question 7

All of the following are part of the five "Cs" of credit analysis EXCEPT

Accepted Answer

A)  currency. 
B)  capital. 
C)  collateral. 
D)  conditions. 
E)  capacity. 
A)  currency. 
B)  capital. 
C)  collateral. 
D)  conditions. 
E)  capacity.

Question 8

The combined costs of holding inventory are called

Accepted Answer

A)  opportunity costs. 
B)  storage costs. 
C)  carrying costs. 
D)  stocking charges. 
E)  maintenance costs. 
A)  opportunity costs. 
B)  storage costs. 
C)  carrying costs. 
D)  stocking charges. 
E)  maintenance costs.

Question 9

What is the equation for the cash conversion cycle?

Accepted Answer

A)  Operating Period + Accounts Payable 
B)  Operating Period × Accounts Payable 
C)  Operating Period - Accounts Payable 
D)  Operating Period / Accounts Payable 
A)  Operating Period + Accounts Payable 
B)  Operating Period × Accounts Payable 
C)  Operating Period - Accounts Payable 
D)  Operating Period / Accounts Payable

Question 10

Frank's Franks posted a cost of goods sold of $5,000 and had an average payables of $125.Calculate the Accounts Payable Period.

Accepted Answer

A)  10.2 
B)  9.125 
C)  13.41 
D)  7.65 
E)  8.54 
A)  10.2 
B)  9.125 
C)  13.41 
D)  7.65 
E)  8.54

Question 11

The inventory method that relies on deliveries coming right before they are needed is:

Accepted Answer

A)  Just-in-Time 
B)  Basket 
C)  LIFO 
D)  FIFO 
A)  Just-in-Time 
B)  Basket 
C)  LIFO 
D)  FIFO

Question 12

Wayne's Wax World has an inventory turnover of 16 times per year and a cost of goods sold of $1,600.Calculate the average inventory turnover.

Accepted Answer

A)  22.81 
B)  1,000 
C)  4.38 
D)  13.92 
E)  14.25 
A)  22.81 
B)  1,000 
C)  4.38 
D)  13.92 
E)  14.25

Question 13

In the 5 C's of credit analysis,________ is the ability of the borrower to pay.

Accepted Answer

A)  Capacity 
B)  Capital 
C)  Character 
D)  Collateral 
E)  Collections 
A)  Capacity 
B)  Capital 
C)  Character 
D)  Collateral 
E)  Collections

Question 14

The total amount that can be borrowed is the firm's:

Accepted Answer

A)  Line of credit 
B)  Max credit 
C)  Line limit 
D)  Credit limit 
A)  Line of credit 
B)  Max credit 
C)  Line limit 
D)  Credit limit

Question 15

All of the following will increase the cash conversion cycle EXCEPT:

Accepted Answer

A)  An increase in accounts receivable 
B)  An increase in inventory 
C)  An increase in costs of goods sold 
D)  An increase in accounts payable 
A)  An increase in accounts receivable 
B)  An increase in inventory 
C)  An increase in costs of goods sold 
D)  An increase in accounts payable

Question 16

ABC Co.has an average inventory of 750.The carrying cost per item is 1.25,the ordering cost is $18 per order,and they make 28 orders per year.What is the total carrying cost for ABC Co?

Accepted Answer

A)  $504 
B)  $937.50 
C)  $1,166.67 
D)  $844.50 
E)  $492.65 
A)  $504 
B)  $937.50 
C)  $1,166.67 
D)  $844.50 
E)  $492.65

Question 17

The minimum level of inventory a firm keeps on hand.

Accepted Answer

A)  EOQ 
B)  Safety Stock 
C)  Reorder Point 
D)  Optimum Inventory Level 
A)  EOQ 
B)  Safety Stock 
C)  Reorder Point 
D)  Optimum Inventory Level

Question 18

A bank will typically lend the firm no more than ________% of the book value of receivables.

Accepted Answer

A)  70 
B)  80 
C)  60 
D)  50 
E)  40 
A)  70 
B)  80 
C)  60 
D)  50 
E)  40

Question 19

Which of the following is a cost of holding inventory?

Accepted Answer

A)  Workers comp 
B)  Reordering costs 
C)  Conversion costs 
D)  Insurance costs 
A)  Workers comp 
B)  Reordering costs 
C)  Conversion costs 
D)  Insurance costs

Question 20

The collection period is:

Accepted Answer

A)  The time it takes to acquire and sell inventory 
B)  The time from the sale of the product until funds are actually received 
C)  The time creditors give to pay 
D)  The time between ordering inventory and having a full inventory 
A)  The time it takes to acquire and sell inventory 
B)  The time from the sale of the product until funds are actually received 
C)  The time creditors give to pay 
D)  The time between ordering inventory and having a full inventory

Calculate the APR for an invoice that has the terms 1/20 net 45.

This kind of financing requires the firm to pledge its accounts receivables to the bank as collateral for the loan.

The best source of information about a customer's credit is/are

________ is the willingness of the borrower to pay obligations owed.

An accounts receivable aging schedule is used to

All of the following are costs of credit EXCEPT

All of the following are part of the five "Cs" of credit analysis EXCEPT

The combined costs of holding inventory are called

What is the equation for the cash conversion cycle?

Frank's Franks posted a cost of goods sold of $5,000 and had an average payables of $125.Calculate the Accounts Payable Period.

The inventory method that relies on deliveries coming right before they are needed is:

Wayne's Wax World has an inventory turnover of 16 times per year and a cost of goods sold of $1,600.Calculate the average inventory turnover.

In the 5 C's of credit analysis,________ is the ability of the borrower to pay.

The total amount that can be borrowed is the firm's:

All of the following will increase the cash conversion cycle EXCEPT:

ABC Co.has an average inventory of 750.The carrying cost per item is 1.25,the ordering cost is $18 per order,and they make 28 orders per year.What is the total carrying cost for ABC Co?

The minimum level of inventory a firm keeps on hand.

A bank will typically lend the firm no more than ________% of the book value of receivables.

Which of the following is a cost of holding inventory?

The collection period 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

Calculate the APR for an invoice that has the terms 1/20 net 45.

This kind of financing requires the firm to pledge its accounts receivables to the bank as collateral for the loan.

The best source of information about a customer's credit is/are

________ is the willingness of the borrower to pay obligations owed.

An accounts receivable aging schedule is used to

All of the following are costs of credit EXCEPT

All of the following are part of the five "Cs" of credit analysis EXCEPT

The combined costs of holding inventory are called

What is the equation for the cash conversion cycle?

Frank's Franks posted a cost of goods sold of $5,000 and had an average payables of $125.Calculate the Accounts Payable Period.

The inventory method that relies on deliveries coming right before they are needed is:

Wayne's Wax World has an inventory turnover of 16 times per year and a cost of goods sold of $1,600.Calculate the average inventory turnover.

In the 5 C's of credit analysis,________ is the ability of the borrower to pay.

The total amount that can be borrowed is the firm's:

All of the following will increase the cash conversion cycle EXCEPT:

ABC Co.has an average inventory of 750.The carrying cost per item is 1.25,the ordering cost is $18 per order,and they make 28 orders per year.What is the total carrying cost for ABC Co?

The minimum level of inventory a firm keeps on hand.

A bank will typically lend the firm no more than ________% of the book value of receivables.

Which of the following is a cost of holding inventory?

The collection period 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