Topic: Float Control
103.
All of the following are different techniques that can be used to help firms reduce
collection float EXCEPT:
104.
All of the following are the different types of float the firm may experience in its collections
EXCEPT:
105.
If a firm starts selling its accounts receivable to a factor, how will the firm’s cash cycle
change?
106.
If demand for a firm’s products suddenly slows down so that inventory increases while
sales decrease, how will the firm’s needs for net working capital react?
107.
If demand for a firm’s products suddenly increases so that inventory decreases while sales
increase, how will the firm’s needs for net working capital react?
108.
Which of the following is the best description of the operating cycle?
109.
When the firm finances the seasonally adjusted average level of asset demand with long–
term debt and equity, the firm is said to follow a:
110.
Why would a firm ever use short-term debt to finance permanent current assets?
111.
Everything else held constant, will an increase in the amount of inventory on hand
increase or decrease the firm’s profitability?
112.
If a firm’s inventory ratio increases, what will happen to the firm’s cash cycle?
113.
All of the following will result in an increase in net working capital EXCEPT:
114.
If a firm’s inventory ratio increases, what will happen to the firm’s operating cycle?
115.
A firm wants to reduce its cash conversion cycle. Which of the following actions will
reduce its cash conversion cycle?
116.
If the firm wants to identify the percentage of accounts receivable that are over 90 days
old, the firm should prepare:
117.
The financing policy that will result in investing in marketable securities when asset
requirements are low is referred to as:
118.
The optimal cash replenishment level will increase with all of the following changes
EXCEPT:
119.
The optimal cash replenishment level will decrease with all of the following changes
EXCEPT:
120.
The operating cycle will increase with all of the following changes EXCEPT:
121.
The operating cycle will decrease with all of the following changes EXCEPT:
122.
Safety stock is referred to as the:
123.
All of the following are examples of carrying costs EXCEPT:
124.
All of the following are examples of carrying costs EXCEPT:
125.
Which of the following will decrease the operating cycle?
126.
Which of the following will increase the operating cycle?
127.
“The net amount of current assets that the firm has to fund, above and beyond those that
someone else funds for them” is referred to as:
Essay Questions
128.
Would a firm ever use short-term debt to finance permanent current assets? Why or why
not?
129.
If a firm needs to keep minimum cash balance on hand and faces both cash inflows and
outflows, which cash management strategy would be most appropriate for the firm to
use?
130.
In Japan, many consumers pay their bills by electronic deduction from their checking
accounts instead of using paper checks. What effect do you think this has on the
collection float of Japanese firms versus that of American firms?
131.
If demand for a firm’s products suddenly slows down so that inventory increases while
sales decrease, how will the firm’s needs for net working capital react?
132.
If a firm is going to take a loan with a bank that has a compensating balance requirement,
how does that affect the amount of money the firm must borrow?
133.
When a firm is determining which current asset policy would work best for them, what
factors must they consider?
134.
Carrying costs are associated with having current assets and fall into two general
categories. List those two categories.
135.
Detail the major differences between the three inventory loan types.
136.
A firm may keep part of its capital tied up in cash for three primary reasons. List the
reasons and explain each.
137.
List and explain the “five C’s” of credit analysis.