Question 1

How should a firm determine whether a restrictive or a flexible financial policy is best given its current situation?

Accepted Answer

Which policy is best for a particular fi...

Question 2

Accounts receivable financing is the term used to describe which of the following types of loans that involve either the assignment or the factoring of a firm's accounts receivable?

Accepted Answer

A)  Secured short-term loan
B)  Unsecured short-term loan
C)  Secured long-term loan
D)  Unsecured long-term loan
E)  Trust receipt loanF) B) and C)
G) A) and E)

Question 3

Lacey's has an average collection period of 32 days and factors all of its receivables immediately at a 1.1 percent discount.Assume all accounts are collected in full.What is the firm's effective cost of borrowing?

Accepted Answer

A)  13.38 percent
B)  13.45 percent
C)  13.57 percent
D)  13.63 percent
E)  13.88 percentF) A) and C)
G) B) and C)

Question 4

Suppose that Martin Metal Products changes its policy and starts requiring all of its customers to pay within 20 days rather than the 30 days that it currently allows.Which one of the following will result from this change?

Accepted Answer

A)  Increase in receivables period
B)  Increase in inventory period
C)  Decrease in cash cycle
D)  Increase in operating cycle
E)  Increase in accounts payable periodF) A) and B)
G) B) and E)

Question 5

A committed line of credit:

Accepted Answer

A)  guarantees that a set amount of funds will be available to a firm for a stated period of time regardless of events that might occur during that time period.
B)  is a guarantee that a bank will purchase a firm's accounts receivable at full value.
C)  provides greater assurance than a noncommitted credit line that funds will be available when needed by a firm.
D)  guarantees that any funds borrowed during a stated period of time will be charged the lowest rate of interest the lending bank offers to any of its customers.
E)  is a loan arrangement for a stated period of time which is free of all costs and fees other than the actual interest paid on the funds borrowed.F) A) and B)
G) B) and D)

Question 6

Which of the following are sources of cash?
I.decreasing accounts receivable
II.increasing inventory
III.increasing accounts payable
IV.increasing common stock

Accepted Answer

A)  I and III only
B)  II and IV only
C)  II and III only
D)  I and IV only
E)  I, III, and IV onlyF) C) and D)
G) B) and E)

Question 7

Greenbriar Grain and Feed has the following estimated sales.  Purchases are equal to 75 percent of the following quarter's sales.The accounts receivable period is 30 days and the accounts payable period is 60 days.Assume there are 30 days in each month.How much will the firm owe its suppliers at the end of quarter 2?

Accepted Answer

A)  $3,692
B)  $3,807
C)  $4,355
D)  $4,550
E)  $5,027F) B) and C)
G) A) and C)

Question 8

Your firm has an average collection period of 52 days.Current practice is to factor all receivables immediately at a 2.2 percent discount.What is the effective cost of borrowing in this case? Assume that default is extremely unlikely.

Accepted Answer

A)  16.12 percent
B)  16.18 percent
C)  16.90 percent
D)  17.53 percent
E)  17.59 percentF) A) and E)
G) C) and D)

Exam 16: Short-Term Financial Planning

How should a firm determine whether a restrictive or a flexible financial policy is best given its current situation?

Correct Answer
verified
Which policy is best for a particular fi...
View Answer

Suppose that Martin Metal Products changes its policy and starts requiring all of its customers to pay within 20 days rather than the 30 days that it currently allows.Which one of the following will result from this change?

Correct Answer
verified

Your firm has an average collection period of 52 days.Current practice is to factor all receivables immediately at a 2.2 percent discount.What is the effective cost of borrowing in this case? Assume that default is extremely unlikely.

Correct Answer
verified

Correct Answer
verified

Accounts receivable financing is the term used to describe which of the following types of loans that involve either the assignment or the factoring of a firm's accounts receivable?

Correct Answer
verified

Which of the following are sources of cash? I.decreasing accounts receivable II.increasing inventory III.increasing accounts payable IV.increasing common stock

Correct Answer
verified

A committed line of credit:

Correct Answer
verified

Lacey's has an average collection period of 32 days and factors all of its receivables immediately at a 1.1 percent discount.Assume all accounts are collected in full.What is the firm's effective cost of borrowing?

Correct Answer
verified

Exam 16: Short-Term Financial Planning

How should a firm determine whether a restrictive or a flexible financial policy is best given its current situation?

Correct AnswerverifiedWhich policy is best for a particular fi...View AnswerShow Answer

Suppose that Martin Metal Products changes its policy and starts requiring all of its customers to pay within 20 days rather than the 30 days that it currently allows.Which one of the following will result from this change?

Correct AnswerverifiedShow Answer

Your firm has an average collection period of 52 days.Current practice is to factor all receivables immediately at a 2.2 percent discount.What is the effective cost of borrowing in this case? Assume that default is extremely unlikely.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Accounts receivable financing is the term used to describe which of the following types of loans that involve either the assignment or the factoring of a firm's accounts receivable?

Correct AnswerverifiedShow Answer

Which of the following are sources of cash? I.decreasing accounts receivable II.increasing inventory III.increasing accounts payable IV.increasing common stock

Correct AnswerverifiedShow Answer

A committed line of credit:

Correct AnswerverifiedShow Answer

Lacey's has an average collection period of 32 days and factors all of its receivables immediately at a 1.1 percent discount.Assume all accounts are collected in full.What is the firm's effective cost of borrowing?

Correct AnswerverifiedShow Answer

Correct Answer
verified
Which policy is best for a particular fi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified