A the aggressive approach usually has high cost high

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a. the aggressive approach usually has high cost, high risk b. the conservative approach usually has low cost, low risk c. the aggressive approach usually has low cost, high risk d. the moderate approach usually has low cost, low risk Use the following information to answer questions 17-19 through 17-21 Permanent and Temporary: Cash $5,000 Accounts payable $8,000 Accounts receivables 8,000 Notes payable 6,000 Fixed Assets 4,000 Long-term debt 1,000 Equity 2,000 $17,000 $17,000 17-19. Calculate the level of working capital: a. $ 5,000 b. $17,000 c. $13,000 d. $0 17-20. Calculate the level of net working capital: a. $ 5,000 b. $17,000 c. $0 d. ($1,000) 207
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17-21. Which approach best describes the method of working capital financing being used? a. conservative approach b. moderate approach c. aggressive approach d. irrational approach Use the following information to answer questions 17-22 through 17-24 Permanent and Temporary: Cash $5,000 Accounts payable $2,000 Accounts receivable 6,000 Notes payable 2,000 Inventory 8,000 Long-term debt 20,000 Fixed assets 16,000 Equity 11,000 $35,000 $35,000 17-22. Calculate the amount of working capital: a. $19,000 b. $35,000 c. $15,000 d. $11,000 17-23. What is amount of net working capital? a. $19,000 b. $35,000 c. $15,000 d. $11,000 17-24. Which working capital financing approach is most probably being used? a. conservative approach b. moderate approach c. aggressive approach d. DuPont approach 208
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Use the following information to answer question 17-25 Temporary Current Assets $ 95,000 Permanent Current Assets 90,000 Fixed assets 400,000 Total Assets $585,000 17-25. Which of the following liability structures would be used in the moderate approach? (Check the appropriate line) a. Accounts payable $5,000 Notes payable 5,000 Long-term debt -0- Equity 575,000 a.________ b. Accounts payable $ 5,000 Notes payable 5,000 Long-term debt 500,000 Equity 75,000 b.________ c. Accounts payable $ 15,000 Notes payable 75,000 Long-term debt 410,000 Equity 80,000 c._________ d. Accounts payable $ 20,000 Notes payable 100,000 Long-term debt 405,000 Equity 60,000 d._________ Use the following information to answer question 17-26 Current assets $ 5,000 Accounts payable $6,000 Fixed assets 10,000 Notes payable 3,000 Long-term debt 6,000 $15,000 $15,000 17-26. Calculate net working capital: a. $0 b. ($4,000) c. $4,000 d. $6,000 17-27. An aggressive approach to working capital financing, in which the firm uses short-term debt to finance all current assets, would usually result in higher net income than a conservative approach if: 209
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a. short-term interest rates rise b. short-term interest rates fall c. long-term interest rates rise d. long-term interest rates fall 17-28. Firms generally choose to finance temporary current assets with short-term debt because: a.
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