Q22 - University of Houston-Victoria FIN 6352 Financial...

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FIN 6352 Financial Management FMQuiz22 Dr. Xavier Garza Gómez University of Houston-Victoria FIN 6352 Financial Management Review Quiz for Chapter 22 - Working Capital Management True-False 1. Since receivables and payables both result from sales transactions, a firm with a high receivables-to-sales ratio will also have a high payables-to-sales ratio. a. True b. False 2. Shorter-term cash budgets, in general, are used for actual cash control while longer-term budgets are used primarily for planning purposes. a. True b. False 3. A firm's collection policy and the procedures it follows to collect accounts receivable play an important role in keeping its deferrables period short, although too strict a collection policy can result in outright losses due to non-payment. a. True b. False Multiple Choice: Concepts 4. Helena Furnishings wants to sharply reduce its cash conversion cycle. Which of the following steps would reduce its cash conversion cycle? a. The company increases its average inventory without increasing its sales. b. The company reduces its DSO. c. The company starts paying its bills sooner, which reduces its average accounts payable without reduc- ing its sales. d. Statements a and b are correct. e. All of the statements above are correct. 5. Which of the following items should a company explicitly include in its monthly cash budget? a.
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This note was uploaded on 11/23/2008 for the course FIN 6352 taught by Professor Gomez during the Spring '08 term at TAMU Intl..

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Q22 - University of Houston-Victoria FIN 6352 Financial...

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