fin 100 need 1 hour

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Question 1

  1.  

One type of investment that would not be suitable for marketable securities would be:

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bankers’ acceptances

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short term notes of U.S. government agencies

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negotiable CD’s

[removed]

  

mortgages

 

Question 2

  1.  The objective of managing current assets and liabilities is to

 

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achieve as low a level of current assets as possible.

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achieve as low a level of current liabilities as possible.

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achieve a balance between profitability and risk that contributes to the firm’s value.

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achieve as high a level of current liabilities as possible.

 

Question 3

  1.  The goal of a company’s cash management policy is to

 

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increase the cash conversion cycle.

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increase the payment period.

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minimize the cash requirement.

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maximize cash outflows.

 

Question 4

  1.  Working capital does not include:

 

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cash

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accounts receivable

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marketable securities

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property, plant, and equipment

 

Question 5

  1.  Calculation of a firm’s average collection period is the same as calculating the:

 

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accounts receivable cycle

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inventory cycle

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accounts payable cycle

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short term operating cycle

  

Question 6

  1.  A negative cash conversion cycle indicates that the

 

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operating cycle exceeds the average payment period.

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average payment period exceeds the operating cycle.

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firm is shortening its average payment period and lengthening its average collection period.

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lengthening its average collection period and lengthening its inventory period.

  

Question 7

  1.  The time between when a payee sends payment and the funds are credited to the payer’s bank account is called the:

 

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collection float

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disbursement float

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total float

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transmittal float

  

Question 8

  1.  Sources of short term financing such as accounts payable, notes payable, and accruals should be used to finance:

 

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all current assets

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all fixed assets

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a portion of the current assets needed to support nonseasonal sales levels plus all of the seasonal build up in current assets

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a portion of the fixed assets plus all of the seasonal build up in current assets

  

Question 9

  1.  Holding all other factors constant, if a firm increases its current liabilities relative to total assets,

 

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it increases return and reduces risk.

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it increases return and increases risk.

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it reduces return and reduces risk.

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it reduces return and increases risk.

  

Question 10

  1.  If a firm purchases materials on credit and thus has accounts payable, its cash conversion cycle will be:

 

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longer than its operating cycle

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the same length as its operating cycle

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shorter than its operating cycle

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the same length as its sales turnover cycle

  

Question 11

  1.  Firms who wish to obtain short term secured loans generally have two major current assets available as collateral in the form of:

 

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cash and marketable securities

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receivables and inventory

[removed]

  

receivables and factoring

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inventory and floor planning

  

Question 12

  1.  Net working capital is defined as:

 

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current assets plus current liabilities

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current assets less fixed assets

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current assets less current liabilities

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current liabilities plus long term liabilities

  

Question 13

  1.  Commercial finance companies obtain loanable funds:

 

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to a lesser extent than commercial banks through equity capital

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through both long and short term borrowing

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from the Small Business Administration

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primarily from the sale of preferred stock

  

Question 14

  1.  The prime rate offered by commercial banks is their _____________ rate to their ______________ quality business customers.

 

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highest, highest

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lowest, lowest

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lowest, highest

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highest, lowest

  

Question 15

  1.  The most important reason for directly issuing or using commercial paper dealers is:

 

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the cost of borrowing is generally less than regular bank rates

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it’s a profitable alternative to the purchase of Treasury bills

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the avoidance of compensating balances

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the convenience and profitability

  

Question 16

  1.  The bank line of credit is:

 

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the type of business activity on which a particular bank concentrates its lending

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the maximum amount of credit extended to a business customer during a period of one year

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the average of loans made to a business customer during a year

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the loan limit that a bank has established for a business customer

  

Question 17

  1.  Permanent current assets are:

 

[removed]

  

accounts receivable that have become bad debts

[removed]

  

inventories that have become obsolete

[removed]

  

the level of current assets equal to fixed assets

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the level of current assets needed to support sales

  

Question 18

  1.  If a firm actually sells its accounts receivable, the process is known as:

 

[removed]

  

wholesale financing

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floor planning

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field crediting

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factoring

  

Question 19

  1.  The purchaser may deduct 2% from the purchase price if payment is made within 10 days; but if not paid within 10 days, the net amount of the purchase is due within 30 days. The sale is made on what terms?

 

[removed]

  

10/30, net/2

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2/10, net/30

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2/30, net/10

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10/2, net/30

  

Question 20

  1.  A __________________ is a claim against a customer’s inventory when the individual items are indistinguishable.

 

[removed]

  

floor plan receipt

[removed]

  

trust receipt

[removed]

  

warehouse receipt

[removed]

  

blanket inventory lien

 

 
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