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51. A firm's permanent working capital refers to the:
52. Firms that continually invest in nontrivial amounts of marketable securities
may
be guilty
of:
53. What happens to a firm whose uses of cash exceed its sources of cash during an
accounting period?
54. Which one of the following would
not
be considered a use of cash?
55. If a firm's current ratio exceeds 1.0, what happens as a result of paying cash to reduce
accounts payable?
56. Assume beginning accounts receivables were $5,000, ending receivables were $4,000,
and $20,000 was collected. What was the amount of sales for the period?
57. A firm had $2,800 cash at the beginning of the period. During the period, the firm
collected $1,600 in receivables, paid $1,850 to supplier, had credit sales of $4,200, and incurred
cash expenses of $2,300. What was the cash balance at the end of the period?
58. Which one of the following is
least
likely to be correct for a firm that repeatedly stretches
its payables?
59. A firm faces a liquidity crunch and must decide between borrowing from a bank at 12%
interest or stretching its payables for one quarter. If it stretches the payables it will forgo a 2%
discount for timely payment. Based solely on cash flows, which would you suggest?
60. A revolving line of credit would be considered:
61. Which one of the following is
not
typically a characteristic of commercial paper?
62. A firm has borrowed $1 million and assigned its receivables to the lender. Because of
defaults, the receivables prove insufficient to cover the debt. In this case, the:
63. Which one of the following is
least
likely to be correct about the factoring of receivables?
64. Ignoring defaults, what is the approximate effective cost of factoring if receivables are
sold at a 4% discount and the average collection period is 2 months?
65. Ignoring defaults, what is the approximate effective cost of factoring if receivables are
sold at a 2% discount and the average collection period is 1 month?
66. Which type of inventory would a bank be most willing to accept as security for a loan?
67. For most corporations, net working capital is:
68. The longer the firm's accounts payable period, the:
69. What is the inventory period for a firm with an annual cost of goods sold of $8 million,
$1.5 million in inventory, and a cash conversion cycle of 75 days?
70. How high can accounts receivable be before the firm's receivables period exceeds 50
days, if annual sales equal $5 million and the cash conversion cycle equals 75 days?
71. What is the accounts payable period given annual sales = $1,200,000, annual cost of
goods sold = $700,000, average accounts payable = $105,000?
72. A firm's inventory and accounts payable periods are 80 and 42 days, respectively. How
long must the firm's receivables period be in order to limit the cash conversion cycle to 65 days?
73. Which one of these statements correctly applies to the carrying costs of cash balances?
74. Customers may change firms when faced with minimal inventory selection. Sales lost in
this manner illustrate the:
75. The goal of managing working capital, such as inventory, should be to minimize the:
76. When managers are continually short-term lenders, they are said to follow a:
77. When the length of the financing is directly related to the life of the asset being financed,
the firm is said to follow a:
78. Which one of these is most associated with a disadvantage of the relaxed strategy of
long- versus short-term financing?
79. Which one of the following is a use of cash?
80. If the statement of sources and uses of cash shows a decrease in the cash balance, an
increase in which one of the following might have eliminated that decrease?
81. Which one of these will decrease net working capital?
82. Managers are alerted to projected cash shortages by way of the:
83. Which one of the following situations should provide managers with the most comfort if
accounts receivable balances are increasing each quarter?
84. In the preparation of cash budgets, capital expenditures are:
85. Managers who "stretch their payables" are attempting to:
