Exam 15: Working Capital and Current Assets Management

In theory, the conservative financing strategy ignores

________ float is the delay between the receipt of a check and the actual deposit of it into the firm's account.

By increasing collection expenditures, the firm can decrease bad debt losses up to a point, beyond which bad debts can not be economically reduced. These inescapable bad debts are attributed to the firm's credit policy.

When managing accounts receivable, a good strategy to employ without losing future sales is to

As credit standards are relaxed, sales are expected to increase and the investment in accounts receivable is expected to decrease.

The three basic types of inventory are all of the following EXCEPT

An increase in the average collection period will result in ________ in the operating cycle.

A computerized inventory system that simulates needed materials requirements for the finished product, and then compares production needs to available inventory balances to determine when orders should be placed is the

Depository banks holding Eurodollar deposits are

Relative to cash flows affecting net working capital, all of the following are true EXCEPT

Table 15.6 A breakdown of Teffan, Inc.'s outstanding accounts receivable dated June 30, 2003 on the basis of the month in which the credit sale was initially made follows. The firm extends 30-day credit terms. -An increase in collection efforts will result in ________ in sales volume, ________ in the investment in accounts receivable, ________ in bad debt expenses, and ________ in collection expenditures.

The credit applicant's ________ is its ability to repay the requested credit.

________ are obligations of the U.S. Treasury with common maturities of 91 to 182 days and that have a strong secondary market.

A negative cash conversion cycle (CCC) means the average payment period (APP) exceeds the operating cycle (OC).

A decrease in the production time to manufacture a finished good will result in ________ in the cash conversion cycle.

To be truly marketable, a security must have three basic characteristics: a ready market, risk-free, and safety of principal.

If a firm uses an aggressive financing strategy,

The ________ is an inventory technique that takes into account various operating and financial costs to determine the order quantity for a specific inventory item.

Mail float is the delay between the deposit of a check by a payee and the actual availability of the funds.

The turnover of accounts receivable can be calculated by dividing annual sales by accounts receivable.