Username:
Password:
LOGIN
Ask a Question Browse Questions Frequently Asked Questions
Question
Offered Price
$3.50

finance data bank

Question # 00004795
Subject: Business / Finance
Due on: 12/30/2013
Posted On: 12/06/2013 01:13 PM
Posted By:
spqr
Spent
$0.00
Earned
$30,002.81
Feedback Score:
Report this Question as Inappropriate
Question

Helena Furnishings wants to sharply reduce its cash conversion cycle. Which of the following steps would reduce its cash conversion cycle?
a. The company increases its average inventory without increasing its sales.
b. The company reduces its DSO.
c. The company starts paying its bills sooner, which reduces its average accounts payable without reducing its sales.
d. Statements a and b are correct.
e. All of the statements above are correct.

Other things held constant, which of the following will cause an increase in working capital?
a. Cash is used to buy marketable securities.
b. A cash dividend is declared and paid.
c. Merchandise is sold at a profit, but the sale is on credit.
d. Long-term bonds are retired with the proceeds of a preferred stock issue.
e. Missing inventory is written off against retained earnings.

Which of the following is typically part of the cash budget?
a. Payments lag.
b. Payment for plant construction.
c. Cumulative cash.
d. Statements a and c are correct.
e. All of the statements above are correct.

Which of the following statements concerning the cash budget is correct?
a. Depreciation expense is not explicitly included, but depreciation effects are implicitly included in estimated tax payments.
b. Cash budgets do not include financial expenses such as interest and dividend payments.
c.Cash budgets do not include cash inflows from long-term sources such as bond issues.
d. Statements a and b are correct.
e. Statements a and c are correct.

a. Depreciation expense is not explicitly included, but depreciation effects are implicitly included in estimated tax payments.

???

Which of the following items should a company explicitly include in its monthly cash budget?
a. Its monthly depreciation expense.
b. Its cash proceeds from selling one of its divisions.
c. Interest paid on its bank loans.
d. Statements b and c are correct.
e. All of the statements above are correct.

Which of the following statements is most correct?
a. A cash management system which minimizes collections float and maximizes disbursement float is better than one with higher collections float and lower disbursement float.
b. A cash management system which maximizes collections float and minimizes disbursement float is better than one with lower collections float and higher disbursement float.
c. The use of a lockbox is designed to minimize cash theft losses. If the cost of the
lockbox is less than theft losses saved, then the lockbox should be installed.
d. Other things held constant, a firm will need an identical line of credit if it can arrange to pay its bills by the 5th of each month than if its bills come due uniformly during the month.
e. The statements above are all false.

Which of the following statements is most correct?
a. A good cash management system would inimize disbursement float and maximize collections float.
b. If a firm begins to use a well-designed lockbox system, this will reduce its customers' net float.
c. In the early 1980's, the prime interest rate hit a high of 21 percent. In 1995 the prime rate was considerably lower. That sharp interest rate decline has increased firms' concerns about the efficiency of their cash management programs.
d. If a firm can get its customers to permit it to pay by wire transfers rather than having to write checks, this will increase its net float and thus reduce its required cash balances.
e. A firm which has such an efficient cash management system that it has positive net float can have a negative checkbook balance at most times and still not have its checks bounce.

?

A lockbox plan is
a. A method for safe-keeping of marketable securities.
b. Used to identify inventory safety stocks.
c. A system for slowing down the collection of checks written by a firm.
d. A system for speeding up a firm's collections of checks received.
e. Not described by any of the statements above.

Which of the following might be attributed to efficient inventory management?
a. High inventory turnover ratio.
b. Low incidence of production schedule disruptions.
c. High total assets turnover.
d. Statements a and c are correct.
e. All of the statements above are correct.

Analyzingdays sales outstanding (DSO) and the aging schedule are two common methods for monitoring receivables. However, they can provide erroneous signals to credit managers when
a. Customers' payments patterns are changing.
b. Sales fluctuate seasonally.
c. Some customers take the discount and others do not.
d. Sales are relatively constant, either seasonally or cyclically.
e. None of the statements above is correct.

Which of the following is not commonly regarded as being a credit policy variable?
a. Credit period.
b. Collection policy.
c. Credit standards.
d. Cash discounts.
e. All of the statements above are credit policy variables.

If easing a firm's credit policy lengthens the collection period and results in a worsening
of the aging schedule, then why do firms take such actions?
a. It normally stimulates sales.
b. To meet competitive pressures.
c. To increase the firm's deferral period for payables.
d. Statements a and b are correct.
e. All of the statements above are correct.

Firms generally choose to finance temporary net operating working capital with shortterm debt because
a. Matching the maturities of assets and liabilities reduces risk.
b. Short-term interest rates have traditionally been more stable than long-term interest rates.
c. A firm that borrows heavily long-term is more apt to be unable to repay the debt than a firm that borrows heavily short-term.
d. The yield curve has traditionally been downward sloping.
e. Sales remain constant over the year, and financing requirements also remain constant

Which of the following statements is most correct?
a. Trade credit is provided to a business only when purchases are made.
b. Commercial paper is a form of short-term financing that is primarily used by large,
financially stable companies.
c. Short-term debt, while often cheaper than long-term debt, exposes a firm to the
potential problems associated with rolling over loans.
d. Statements b and c are correct.
e. All of the statements above are correct.

Which of the following statements is incorrect?
a. Commercial paper can be issued by virtually any firm so long as it is willing to pay the going interest rate.
b. Accruals are "free" in the sense that no explicit interest is paid on these funds.
c. A conservative approach to working capital will result in all permanent assets being financed using long-term securities.
d. The risk to the firm of borrowing with short-term credit is usually greater than with long-term debt. Added risk can stem from greater variability of interest costs on short-term debt.
e. Bank loans have a lower interest rate than commercial paper.

Which of the following is not a situation that might lead a firm to hold marketable securities?
a. The firm has purchased a fixed asset that will require a large write-off of depreciable expense.
b. The firm must meet a known financial commitment, such as financing an ongoing construction project.
c. The firm must finance seasonal operations.
d. The firm has just sold long-term securities and has not yet invested the proceeds in earning assets.
e. None of the statements above is correct. (All of the situations might lead the firm to hold marketable securities.)

Which of the following statements concerning commercial paper is incorrect?
a. Commercial paper is generally written for terms less than 270 days.
b. Commercial paper generally carries an interest rate below the prime rate.
c. Commercial paper is sold to money market mutual funds, as well as to other financial
institutions and nonfinancial corporations.
d. Commercial paper can be issued by virtually any firm so long as it is willing to pay the going interest rate.
e. Commercial paper is a type of unsecured promissory note issued by large, strong
firms.

Ignoring cost and other effects on the firm, which of the following measures would tend to reduce the cash conversion cycle?
a. Maintain the level of receivables as sales decrease.
b. Buy more raw materials to take advantage of price breaks.
c. Take discounts when offered.
d. Forgo discounts that are currently being taken.
e. Offer a longer deferral period to customers.

Which of the following actions are likely to reduce the length of a company's cash conversion cycle?
a. Adopting a new inventory system that reduces the inventory conversion period.
b. Reducing the average days sales outstanding (DSO) on its accounts receivable.
c. Reducing the amount of time the company takes to pay its suppliers.
d. Statements a and b are correct.
e. All of the statements above are correct.

Tutorials for this Question
Available for
$5.00

finance data bank

Tutorial # 00004591
Number of words in this Tutorial: 1676
Posted On: 12/06/2013 01:40 PM
Feedback Score: Not rated yet!
This tutorial has been purchased 0 times.
Posted By:
spqr
Spent
$0.00
Earned
$30,002.81
Feedback Score:
Report this Tutorial as Inappropriate
Tutorial Preview …that xxxxxxx heavily xxxxxxxxx is more xxx to be xxxxxx to xxxxx xxx debt xxxx a firm xxxx borrows heavily xxxxxxxxxx d xxx xxxxx curve xxx traditionally been xxxxxxxx sloping e xxxxx remain xxxxxxxx xxxx the xxxxx and financing xxxxxxxxxxxx also remain xxxxxxxx a xxxxxxxx xxx maturities xx assets and xxxxxxxxxxx reduces risk xxx Which xx xxx following xxxxxxxxxx is most xxxxxxxx a Trade xxxxxx is xxxxxxxx xx a xxxxxxxx only when xxxxxxxxx are made x Commercial xxxxx xx a xxxx of short-term xxxxxxxxx that is xxxxxxxxx used xx xxxxxx financially xxxxxx companies c xxxxxxxxxx debt, while xxxxx cheaper xxxx xxxxxxxxx debt, xxxxxxx a firm xx the potential xxxxxxxx associated xxxx xxxxxxx over xxxxx d Statements x and c xxx correct x xxx of xxx statements above xxx correct e xxx of xxx xxxxxxxxxx above xxx correct ??? xxxxx of the xxxxxxxxx statements xx xxxxxxxxxx a xxxxxxxxxx paper can xx issued by xxxxxxxxx any xxxx xx long xx it is xxxxxxx to pay xxx going xxxxxxxx xxxx b xxxxxxxx are "free" xx the sense xxxx no xxxxxxxx xxxxxxxx is xxxx on these xxxxx c A xxxxxxxxxxxx approach xx xxxxxxx capital xxxx result in xxx permanent assets xxxxx financed xxxxx xxxxxxxxx securities x The risk xx the firm xx borrowing xxxx xxxxxxxxxx credit xx usually greater xxxx with long-term xxxx Added xxxx xxx stem xxxx greater variability xx interest costs xx short-term xxxx x Bank xxxxx have a xxxxx interest rate xxxx commercial xxxxx x Commercial xxxxx can be xxxxxx by virtually xxx firm xx xxxx as xx is willing xx pay the xxxxx interest xxxx xxx Which xx the following xx not a xxxxxxxxx that xxxxx xxxx a xxxx to hold xxxxxxxxxx securities? a xxx firm xxx xxxxxxxxx a xxxxx asset that xxxx require a xxxxx write-off xx xxxxxxxxxxx expense x The firm xxxx meet a xxxxx financial xxxxxxxxxxx xxxx as xxxxxxxxx an ongoing xxxxxxxxxxxx project c xxx firm xxxx xxxxxxx seasonal xxxxxxxxxx d The xxxx has just xxxx long-term xxxxxxxxxx xxx has xxx yet…
Attachments
25.docx (16.34 KB)
Preview: lengthens xxx collection xxxxxx and results xx a worsening of xxx aging xxxxxxxxx xxxx why xx firms take xxxx actions?a It xxxxxxxx stimulates xxxxx x To xxxx competitive pressures x To increase xxx firm's xxxxxxxx xxxxxx for xxxxxxxx d Statements x and b xxx correct x xxx of xxx statements above xxx correct d xxxxxxxxxx a xxx x are xxxxxxx ???Firms generally xxxxxx to finance xxxxxxxxx net xxxxxxxxx xxxxxxx capital xxxx shortterm debt xxxxxxxx Matching the xxxxxxxxxx of xxxxxx xxx liabilities xxxxxxx risk b xxxxxxxxxx interest rates xxxx traditionally xxxx xxxx stable xxxx long-term interest xxxxx c A xxxx that xxxxxxx xxxxxxx long-term xx more apt xx be unable xx repay xxx xxxx than x firm that xxxxxxx heavily short-term x The xxxxx xxxxx has xxxxxxxxxxxxx been downward xxxxxxx e Sales xxxxxx constant xxxx xxx year, xxx financing requirements xxxx remain constanta xxxxxxxx the xxxxxxxxxx xx assets xxx liabilities reduces xxxx ???Which of xxx following xxxxxxxxxx xx most xxxxxxxxx Trade credit xx provided to x business xxxx xxxx purchases xxx made b xxxxxxxxxx paper is x form xx xxxxxxxxxx financing xxxx is primarily xxxx by large, financially xxxxxx companies x xxxxxxxxxx debt, xxxxx often cheaper xxxx long-term debt, xxxxxxx a xxxx xx thepotential xxxxxxxx associated with xxxxxxx over loans x Statements x xxx c xxx correct e xxx of the xxxxxxxxxx above xxx xxxxxxx e xxx of the xxxxxxxxxx above are xxxxxxx ???Which xx xxx following xxxxxxxxxx is incorrect?a xxxxxxxxxx paper can xx issued xx xxxxxxxxx any xxxx so long xx it is xxxxxxx to xxx xxx going xxxxxxxx rate b xxxxxxxx are "free" xx the xxxxx xxxx no xxxxxxxx interest is xxxx on these xxxxx c x xxxxxxxxxxxx approach xx working capital xxxx result in xxx permanent xxxxxx xxxxx financed xxxxx long-term securities x The risk xx the xxxx xx borrowing xxxx short-term credit xx usually greater xxxx with xxxxxxxxx xxxx Added xxxx can stem xxxx greater variability xx interest xxxxx xx short-term xxxx e
Purchase this Tutorial @ $5.00 *
* - Additional Paypal / Transaction Handling Fee (3.4% of Tutorial price + $0.30) applicable