FINC400 quiz 3
FINC400 week 3 quiz
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As a general rule, it is desirable to finance the permanent assets, including "permanent current assets", with long-term debt and equity.
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Question 2 of 25 |
4.0 Points |
Short-term interest rates are generally lower than long-term interest rates.
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Question 3 of 25 |
4.0 Points |
Commercial bank term loans
A.usually carry fixed interest rates. |
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B.are very short-term in nature. |
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C.are offered to superior credit applicants. |
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D.both b and c. |
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Question 4 of 25 |
4.0 Points |
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Dun & Bradstreet is known for providing
A.interest rate information to cash managers. |
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B.credit scoring reports that rank a company's payment habits relative to its peer group. |
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C.cash management systems to corporate treasurers. |
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D.consumer credit reports to credit card companies |
Question 5 of 25 |
4.0 Points |
Small companies finance a relatively greater proportion of their assets through trade credit than do larger concerns.
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Question 6 of 25 |
4.0 Points |
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A financial executive devotes the most time to
A.Long-range planning. |
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B.Capital budgeting. |
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C.Short-term financing. |
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D.Working capital management. |
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Question 7 of 25 |
4.0 Points |
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Short-term financing is risky because of the possibility of rising short-term rates and the inability of always being able to refund short-term debt.
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Question 8 of 25 |
4.0 Points |
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From the banker's point of view, short-term bank credit is an excellent way of financing
A.fixed assets. |
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B.permanent working capital needs. |
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C.repayment of long-term debt. |
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D.seasonal bulges in inventory and receivables. |
Question 9 of 25 |
4.0 Points |
One of the first considerations in cash management is
A.to have as much cash as possible on hand. |
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B.synchronization of cash inflows and cash outflows. |
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C.profitability. |
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D.to put any excess cash into accounts receivable. |
uestion 10 of 25 |
4.0 Points |
Cash balances are usually determined by the amount of cash flowing through the firm on a yearly basis.
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Seasonal production allows for maximum efficiency in machinery and manpower use.
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Question 12 of 25 |
4.0 Points |
Even during slack loan periods, banks will never loan out money at an interest rate lower than the prime rate because the prime rate is their best rate.
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Question 13 of 25 |
4.0 Points |
The use of cash budgeting procedures
A.helps the firm plan its current asset levels for a given production plan. |
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B.makes managing inventory easier under seasonal production. |
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C. illustrates fluctuating levels of current assets for a given production plan. |
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D.all of these are correct.
Permanent current assets are not similar to fixed assets because they are fully liquidated within the year.
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Question 15 of 25 |
4.0 Points |
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Modos Company has deposited $3,500 in checks received from customers. It has written $1,400 in checks to its suppliers. The initial bank and book balance was $600. If $1,600 of its customer’s checks have cleared but only $600 of its own, calculate its float.
A.$1,200 |
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B.$1,100 |
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C.$300 |
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D.$700 |
Question 16 of 25 |
4.0 Points |
A Just-In-Time (JIT) inventory management program has all but which of the following requirements?
A.quality production |
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B.large safety stocks |
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C.close ties between suppliers, manufacturers, and customers |
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D.minimizing inventory levels |
Question 17 of 25 |
4.0 Points |
Because of changing economic conditions, it is difficult for companies such as Dun & Bradstreet to devise models predicting payment problems and probability of bankruptcy 12 months in the future.
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Question 18 of 25 |
4.0 Points |
A trade discount is a percentage reduction from the invoice price given for purchasing certain minimum quantities.
Question 19 of 25 |
4.0 Points |
The Truth in Lending law is designed to protect
A.corporate borrowers. |
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B.banks. |
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C. consumers. |
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D.investors in municipal bonds. |
Question 20 of 25 |
4.0 Points |
A "normal" term structure of interest rates would depict
A.short-term rates higher than long-term rates. |
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B.long-term rates higher than short-term rates. |
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C.no general relationship between short- and long-term rates. |
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D.Intermediate rates (1-5 years) lower than both short-term and long-term rates. |
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Question 21 of 25 |
4.0 Points |
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Bank loans to business firms
A.are usually short-term in nature. |
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B.are preferred by the banker to be self-liquidating. |
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C.may require compensating balances. |
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D.all of these. |
Question 22 of 25 |
4.0 Points |
Normally, permanent current assets should be financed by
A.long-term funds. |
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B.short-term funds. |
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C.borrowed funds. |
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D.internally generated funds. |
Question 23 of 25 |
4.0 Points |
Which of the following is not a valid quantitative measure for accounts receivable collection policies?
A.average collection period |
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B.aging of accounts receivables |
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C.ratio of debt to equity |
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D.ratio of bad debts to credit sales |
uestion 24 of 25 |
4.0 Points |
Working capital management is relatively unimportant for the small business.
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Question 25 of 25 |
4.0 Points |
For most firms, the primary motive for holding cash is the transaction motive.
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Rating:
5/
Solution: FINC400 quiz 3