Question 1

A reduction in carrying costs would increase the economic order quantity.

Accepted Answer

A) True 
 B)False

Question 2

Money market funds

Accepted Answer

A)   are modeled after money market deposit accounts.
B)   are insured up to $100,000.
C)   have a minimum balance of $2,500.
D)   earn competitive market rates of return.E) A) and B)
F) B) and D)

Question 3

A Just-In-Time (JIT)  inventory management program has all but which of the following requirements?

Accepted Answer

A)   Quality production
B)   Large safety stocks
C)   Close ties between suppliers, manufacturers, and customers
D)   Minimizing inventory levelsE) A) and C)
F) C) and D)

Question 4

A banker's acceptance

Accepted Answer

A)   is a draft drawn on a bank and paid by that bank when presented to it.
B)   may be accepted by the bank for future payment.
C)   can be traded in a relatively liquid market until maturity.
D)   All of the options are true.E) A) and B)
F) A) and C)

Question 5

When considering risk and popularity, banker's acceptances are ranked behind Treasury bills and commercial paper as a vehicle for short-term investments.

Accepted Answer

A) True 
 B)False

Question 6

Waldron Inc. is considering selling to a group of new customers that will bring in credit sales of $24,000 with a return on sales of 5%. The only new investment will be in accounts receivable. Waldron has a turnover ratio of 6 to 1 between sales and accounts receivable. What is Waldron Inc.'s expected return on investment?

Accepted Answer

A)   30%
B)   25%
C)   5%
D)   0.8%E) All of the above
F) B) and C)

Question 7

Unfortunately, float is too complicated to be effectively managed through any combination of disbursement and collection strategies.

Accepted Answer

A) True 
 B)False

Question 8

The difference between the amount of cash on the firm's books and the amount credited to it by its bank is

Accepted Answer

A)   an overdraft.
B)   interest revenue.
C)   extended disbursement.
D)   float.E) A) and C)
F) B) and C)

Question 9

When utilizing a lockbox system, a customer typically sends a check to the bank, a bank employee picks up the check and processes the check electronically and then sends record of payment to the company's finance center.

Accepted Answer

A) True 
 B)False

Question 10

Just-in-time inventory management typically pushes the cost of holding inventory from the manufacturer to the manufacturer's suppliers.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is the most liquid asset?

Accepted Answer

A)   Prepaid expenses
B)   Inventory
C)   Cash equivalents
D)   Accounts receivableE) A) and B)
F) B) and D)

Question 12

International cash management systems are more complex than domestic cash management systems because of

Accepted Answer

A)   the risk involved in currency fluctuations.
B)   the changing interest rates across countries.
C)   varying time zones across countries.
D)   All of the options are true.E) A) and B)
F) C) and D)

Question 13

Companies that are mostly influenced by seasonal sales have to make a choice between

Accepted Answer

A)   level production and inventory buildup.
B)   seasonal production and an uneven workforce.
C)   a stable workforce and a fluctuating workforce.
D)   All of the options are true.E) C) and D)
F) A) and D)

Question 14

Money market funds are

Accepted Answer

A)   accounts that allow small investors to participate in buying large-denomination securities.
B)   extremely risky but high-yielding accounts used by large corporations to finance operations.
C)   accounts that allow small investors to buy shares in companies that then buy shares of common stock.
D)   pools of bonds held by large utility companies.E) A) and B)
F) B) and C)

Question 15

The rate on Eurodollar certificates of deposit is usually lower than domestic certificates of deposit.

Accepted Answer

A) True 
 B)False

Question 16

Every message routed through SWIFT is encrypted and every money transaction is authorized by another code for security purposes.

Accepted Answer

A) True 
 B)False

Question 17

A lock-box system is a method of extending disbursements.

Accepted Answer

A) True 
 B)False

Question 18

When considering a potential customer, the firm should overlook the customer's credit history if the customer is purchasing a huge order.

Accepted Answer

A) True 
 B)False

Question 19

The amount of safety stock that a firm carries depends upon

Accepted Answer

A)   the predictability of inventory usage.
B)   the time period necessary to fill inventory orders.
C)   the riskiness of the storage facility.
D)   the predictability of inventory usage and the time period necessary to fill inventory orders.E) C) and D)
F) None of the above

Question 20

Variables important to credit scoring models include

Accepted Answer

A)   age of company in years.
B)   negative public records.
C)   facility ownership.
D)   All of the options are true.E) A) and D)
F) None of the above

Exam 7: Current Asset Management

The amount of safety stock that a firm carries depends upon

Correct Answer
verified

A reduction in carrying costs would increase the economic order quantity.

Correct Answer
verified

Just-in-time inventory management typically pushes the cost of holding inventory from the manufacturer to the manufacturer's suppliers.

Correct Answer
verified

When considering risk and popularity, banker's acceptances are ranked behind Treasury bills and commercial paper as a vehicle for short-term investments.

Correct Answer
verified

A Just-In-Time (JIT) inventory management program has all but which of the following requirements?

Correct Answer
verified

The rate on Eurodollar certificates of deposit is usually lower than domestic certificates of deposit.

Correct Answer
verified

When considering a potential customer, the firm should overlook the customer's credit history if the customer is purchasing a huge order.

Correct Answer
verified

A banker's acceptance

Correct Answer
verified

Money market funds are

Correct Answer
verified

Unfortunately, float is too complicated to be effectively managed through any combination of disbursement and collection strategies.

Correct Answer
verified

When utilizing a lockbox system, a customer typically sends a check to the bank, a bank employee picks up the check and processes the check electronically and then sends record of payment to the company's finance center.

Correct Answer
verified

A lock-box system is a method of extending disbursements.

Correct Answer
verified

Variables important to credit scoring models include

Correct Answer
verified

International cash management systems are more complex than domestic cash management systems because of

Correct Answer
verified

Which of the following is the most liquid asset?

Correct Answer
verified

Companies that are mostly influenced by seasonal sales have to make a choice between

Correct Answer
verified

The difference between the amount of cash on the firm's books and the amount credited to it by its bank is

Correct Answer
verified

Money market funds

Correct Answer
verified

Correct Answer
verified

Every message routed through SWIFT is encrypted and every money transaction is authorized by another code for security purposes.

Correct Answer
verified

Exam 7: Current Asset Management

The amount of safety stock that a firm carries depends upon

Correct AnswerverifiedShow Answer

A reduction in carrying costs would increase the economic order quantity.

Correct AnswerverifiedShow Answer

Just-in-time inventory management typically pushes the cost of holding inventory from the manufacturer to the manufacturer's suppliers.

Correct AnswerverifiedShow Answer

When considering risk and popularity, banker's acceptances are ranked behind Treasury bills and commercial paper as a vehicle for short-term investments.

Correct AnswerverifiedShow Answer

A Just-In-Time (JIT) inventory management program has all but which of the following requirements?

Correct AnswerverifiedShow Answer

The rate on Eurodollar certificates of deposit is usually lower than domestic certificates of deposit.

Correct AnswerverifiedShow Answer

When considering a potential customer, the firm should overlook the customer's credit history if the customer is purchasing a huge order.

Correct AnswerverifiedShow Answer

A banker's acceptance

Correct AnswerverifiedShow Answer

Money market funds are

Correct AnswerverifiedShow Answer

Unfortunately, float is too complicated to be effectively managed through any combination of disbursement and collection strategies.

Correct AnswerverifiedShow Answer

When utilizing a lockbox system, a customer typically sends a check to the bank, a bank employee picks up the check and processes the check electronically and then sends record of payment to the company's finance center.

Correct AnswerverifiedShow Answer

A lock-box system is a method of extending disbursements.

Correct AnswerverifiedShow Answer

Variables important to credit scoring models include

Correct AnswerverifiedShow Answer

International cash management systems are more complex than domestic cash management systems because of

Correct AnswerverifiedShow Answer

Which of the following is the most liquid asset?

Correct AnswerverifiedShow Answer

Companies that are mostly influenced by seasonal sales have to make a choice between

Correct AnswerverifiedShow Answer

The difference between the amount of cash on the firm's books and the amount credited to it by its bank is

Correct AnswerverifiedShow Answer

Money market funds

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Every message routed through SWIFT is encrypted and every money transaction is authorized by another code for security purposes.

Correct AnswerverifiedShow Answer

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