Question 1

The economic order quantity:

Accepted Answer

A)   assumes that inventory usage is seasonal.
B)   assumes that delivery times of each order are consistent.
C)   considers stock-outs.
D)   assumes that inventory needs are constant.E) A) and B)
F) None of the above

Question 2

A bankers' acceptance:

Accepted Answer

A)   is a draft drawn on a corporation.
B)   may be accepted by the corporation for future payment.
C)   is a long term investment accepted by the bank.
D)   is traded in a relatively liquid market until maturity.E) None of the above
F) B) and C)

Question 3

How can a firm achieve faster collection times? Why is this desirable?

Accepted Answer

A firm must be diligent in collecting mo...

Question 4

If you bought a T-bill at $99.44 and held it for 180 days what would your return be?

Accepted Answer

A)   1.14%
B)   011419%
C)   0056%
D)   11.49%E) None of the above
F) A) and B)

Question 5

Hedging:

Accepted Answer

A)   is a way to reduce your accounts receivable collection period.
B)   increases risk.
C)   is a non-binding agreement to buy or sell a financial futures contract.
D)   can be carried out with a futures contract.E) B) and D)
F) None of the above

Question 6

The amount of safety stock that a firm carries depends upon:

Accepted Answer

A)   the unpredictability of inventory used.
B)   the supply chain costs.
C)   the riskiness of the storage facility.
D)   the time period necessary to fill inventory orders.E) A) and D)
F) None of the above

Question 7

International cash management is more complex than domestic based cash management because of:

Accepted Answer

A)   difficult capital asset management.
B)   similarity in banking systems.
C)   exchange rate parity.
D)   currency risk fluctuations.E) None of the above
F) A) and B)

Question 8

Cost savings from JIT inventory management include:

Accepted Answer

A)   lower transaction fees.
B)   lower raw material cost.
C)   lower productivity.
D)   lower inventory financing costs.E) B) and C)
F) C) and D)

Question 9

Inventory is usually divided into three basic categories except:

Accepted Answer

A)   projected sales.
B)   work in progress.
C)   finished goods.
D)   raw materials.E) A) and B)
F) None of the above

Question 10

Describe the 3 basic requirements of Just-in-Time inventory management.

Accepted Answer

Just-in-time inventory management is par...

Question 11

Electronic funds transfer will likely increase the use of float.

Accepted Answer

A) True 
 B)False

Question 12

The cash generating process for a firm is continuous, even though cash flow can be sporadic.

Accepted Answer

A) True 
 B)False

Question 13

"Extended disbursement float" has to do with the length of time a corporation takes to collect bills.

Accepted Answer

A) True 
 B)False

Question 14

Ardvark Corp. (AC)  reported annual sales of $15,500,000. In the past AC's customers have paid within an average of 35 days. AC's management is considering allowing customers to pay in 40 days.
-If AC increases it collection period to 40 days its average AR will increase to _______.

Accepted Answer

A)   $1,698,640
B)   $567,000
C)   $2,106,788
D)   $3,238,999E) A) and B)
F) All of the above A

Question 15

-How many orders will be made per year?

Accepted Answer

A)   8.4 orders per year
B)   12 orders per year
C)   91 orders per year
D)   4.27 orders per yearE) B) and C)
F) All of the above D

Question 16

Describe and explain several benefits and downsides of a Just-in-Time inventory program.

Accepted Answer

Benefits of JIT:
1) Cost savings from lower levels of inventory and reduced financing cost are expected.
2) A JIT plant may use much less space than the standard plant and therefore saves construction costs and reduces its overhead expenses for utilities and manpower.
3) Computerized ordering systems and EDI systems between suppliers, production, and manufacturing reduce rekeying errors and duplication of forms for the accounting and finance functions.
4) Supplier lists may be reduced, creating savings in quality control programs.
5) JIT can reduce quality control costs as much as 60%, but these costs can often be overlooked by financial analysts because JIT prevents defects rather than detecting poor quality (therefore no cost savings are recognized).
6) Elimination of waste-one of the side benefits of a total quality control system coupled with JIT.
The Downside of JIT:
1) Some JIT management systems allow for inventory levels as low as 1 hour's worth of parts. The discipline of these levels and the required process has imposed an extraordinary rigour on firms. Such a system requires a substantial expenditure on computer systems to coordinate the delivery activity.
2) May be forced to shut down manufacturing plants if parts cannot be delivered by suppliers due to weather or other disruptions. The cost is lost business.

Question 17

A multinational company may prefer to hold sizeable cash balances in one currency rather than another because:

Accepted Answer

A)   of low interest rates existing in one country.
B)   one country's currency may be weaker relative to the dollar.
C)   of interest rate differentials on short term investments.
D)   both currencies are at parity.E) B) and D)
F) C) and D)

Question 18

The economic order quantity:

Accepted Answer

A)   determines the reorder point.
B)   is the lowest cost amount to order considering all costs.
C)   determines the safety stock.
D)   requires the number of days to maturity.E) A) and B)
F) None of the above

Question 19

International cash management systems often consider:

Accepted Answer

A)   the use of the gold standard.
B)   the similarity of interest rates across countries.
C)   the similarity of transaction costs.
D)   the risk involved in currency fluctuations.E) All of the above
F) A) and D)

Question 20

-What is the total cost of this inventory decision?

Accepted Answer

A)   $640.85
B)   $739.52
C)   $1,279.85
D)   $2,556.59E) B) and D)
F) B) and C)

Exam 7: Current Asset Management

The economic order quantity:

Correct Answer
verified

A bankers' acceptance:

Correct Answer
verified

How can a firm achieve faster collection times? Why is this desirable?

Correct Answer
verified
A firm must be diligent in collecting mo...
View Answer

If you bought a T-bill at $99.44 and held it for 180 days what would your return be?

Correct Answer
verified

Hedging:

Correct Answer
verified

The amount of safety stock that a firm carries depends upon:

Correct Answer
verified

International cash management is more complex than domestic based cash management because of:

Correct Answer
verified

Cost savings from JIT inventory management include:

Correct Answer
verified

Inventory is usually divided into three basic categories except:

Correct Answer
verified

Describe the 3 basic requirements of Just-in-Time inventory management.

Correct Answer
verified
Just-in-time inventory management is par...
View Answer

Electronic funds transfer will likely increase the use of float.

Correct Answer
verified

The cash generating process for a firm is continuous, even though cash flow can be sporadic.

Correct Answer
verified

"Extended disbursement float" has to do with the length of time a corporation takes to collect bills.

Correct Answer
verified

Ardvark Corp. (AC) reported annual sales of $15,500,000. In the past AC's customers have paid within an average of 35 days. AC's management is considering allowing customers to pay in 40 days. -If AC increases it collection period to 40 days its average AR will increase to _______.

Correct Answer
verified
A

-How many orders will be made per year?

Correct Answer
verified
D

Describe and explain several benefits and downsides of a Just-in-Time inventory program.

A multinational company may prefer to hold sizeable cash balances in one currency rather than another because:

Correct Answer
verified

The economic order quantity:

Correct Answer
verified

International cash management systems often consider:

Correct Answer
verified

-What is the total cost of this inventory decision?

Correct Answer
verified

Exam 7: Current Asset Management

The economic order quantity:

Correct AnswerverifiedShow Answer

A bankers' acceptance:

Correct AnswerverifiedShow Answer

How can a firm achieve faster collection times? Why is this desirable?

Correct AnswerverifiedA firm must be diligent in collecting mo...View AnswerShow Answer

If you bought a T-bill at $99.44 and held it for 180 days what would your return be?

Correct AnswerverifiedShow Answer

Hedging:

Correct AnswerverifiedShow Answer

The amount of safety stock that a firm carries depends upon:

Correct AnswerverifiedShow Answer

International cash management is more complex than domestic based cash management because of:

Correct AnswerverifiedShow Answer

Cost savings from JIT inventory management include:

Correct AnswerverifiedShow Answer

Inventory is usually divided into three basic categories except:

Correct AnswerverifiedShow Answer

Describe the 3 basic requirements of Just-in-Time inventory management.

Correct AnswerverifiedJust-in-time inventory management is par...View AnswerShow Answer

Electronic funds transfer will likely increase the use of float.

Correct AnswerverifiedShow Answer

The cash generating process for a firm is continuous, even though cash flow can be sporadic.

Correct AnswerverifiedShow Answer

"Extended disbursement float" has to do with the length of time a corporation takes to collect bills.

Correct AnswerverifiedShow Answer

Ardvark Corp. (AC) reported annual sales of $15,500,000. In the past AC's customers have paid within an average of 35 days. AC's management is considering allowing customers to pay in 40 days. -If AC increases it collection period to 40 days its average AR will increase to _______.

Correct AnswerverifiedA

-How many orders will be made per year?

Correct AnswerverifiedD

Describe and explain several benefits and downsides of a Just-in-Time inventory program.

A multinational company may prefer to hold sizeable cash balances in one currency rather than another because:

Correct AnswerverifiedShow Answer

The economic order quantity:

Correct AnswerverifiedShow Answer

International cash management systems often consider:

Correct AnswerverifiedShow Answer

-What is the total cost of this inventory decision?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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A firm must be diligent in collecting mo...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified
Just-in-time inventory management is par...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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A

Correct Answer
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D

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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