Test Bank Cash Budget1 (1)

Test Bank Cash Budget1 (1) - SHORT-TERM FINANCE AND...

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SHORT-TERM FINANCE AND PLANNING I. CONCEPTS CHANGES IN CASH d 16. Which of the following would result in an increase in cash? a. Inventory is purchased using funds from a new equity issue. b. Existing accounts receivable are charged off, that is, considered uncollectible. c. A firm reduces its inventory loan at the bank in order to free up a trust receipt. d. The firm markets a new equity issue to the public via a rights offer. e. Accrued liabilities decrease. OPERATING AND CASH CYCLES e 17. Which of the following statements is true? a. The inventory period of the operating cycle ends when the receivable it creates is actually paid for by the customer. b. The accounts receivable period is always greater than or equal to the length of the cash cycle. c. The inventory period plus the accounts receivable period is equal in length to the operating cycle plus the cash cycle. d. The accounts payable period ends when the inventory is sold. e. The length of the operating cycle is always greater than or equal to the length of the cash cycle. CASH CYCLE b 18. All else the same, which of the following would increase the length of a firm’s cash cycle? Consider each in isolation of one another. I. Inventory turnover increases II. Accounts receivable period increases III. Accounts payable period increases a. I only b. II only c. III only d. I and III only e. II and III only CASH CYCLE a 19. All else the same, which of the following would decrease the length of the cash cycle? a. The inventory period decreases. b. The inventory turnover decreases. c. The accounts receivable turnover decreases. d. The accounts payable turnover increases. e. The time allowed for customers to pay their bills is extended from 30 to 45 days. FLEXIBLE SHORT-TERM FINANCIAL POLICY a 20. Which of the following would move a firm toward a flexible short-term financial policy? I. Credit restrictions for accounts receivable are eased. II. The level of investment in inventory is decreased. III. Investment in marketable securities is decreased. a. I only
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CHAPTER 19 b. I and II only c. II and III only d. III only e. I, II, and III SOURCES OF CASH b 21. Which of the following is a source of cash, all else the same? a. Retiring commercial paper. b. Increasing accounts payable. c. Implementing a more lax credit collection policy. d. Selling inventory on credit. e. Renewing a committed line of credit. USES OF CASH a 22. Which of the following is a use of cash, all else the same? a. Implementing a more lax credit collection policy. b. Increasing accounts payable. c. Factoring accounts receivable. d. Reduction of inventory that results from increased sales. e. Cancellation of the need for a compensating balance. SHORT-TERM FINANCIAL PLAN
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Test Bank Cash Budget1 (1) - SHORT-TERM FINANCE AND...

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