Question 1

Which of the following statements is correct?

Accepted Answer

A)   Poor synchronisation of cash flows which results in high cash management costs can be partially offset by increasing disbursement float and decreasing collections float.
B)   The size of a firm's net float is primarily a function of its natural cash flow synchronisation and how it clears its checks.
C)   Lockbox systems are used mainly for security purposes as well as to decrease the firm's net float.
D)   If a firm can speed up its collections and slow down its disbursements, it will be able to reduce its net float.
E)   A firm practicing good cash management and making use of positive net float will bring its check book balance as close to zero as possible, but must never generate a negative book balance.F) B) and C)
G) C) and E)

Question 2

The primary purpose of compensating balances required of borrowers is to compensate the bank in the event the borrower defaults on the loan.

Accepted Answer

A) True 
 B)False

Question 3

A lockbox plan is

Accepted Answer

A)   A method for safe-keeping of marketable securities.
B)   Used to identify inventory safety stocks.
C)   A system for slowing down the collection of checks written by a firm.
D)   A system for speeding up a firm's collections of checks received.
E)   Not described by any of the above statements.F) C) and E)
G) D) and E)

Question 4

Jumpdisk Company writes checks averaging R15,000 a day, and it takes 5 days for these checks to clear.The firm also receives checks in the amount of R17,000 per day, but the firm loses three days while its receipts are being deposited and cleared.What is the firm's net float in rands?

Accepted Answer

A)   R126,000
B)   R75,000
C)   R32,000
D)   R24,000
E)   R16,000F) A) and B)
G) A) and C)

Question 5

Which of the following would cause average inventory holdings to decrease, other things held constant?

Accepted Answer

A)   Fixed order costs double.
B)   The purchase price of inventory items decreases by 50 percent.
C)   The carrying cost of an item decreases (as a percent of purchase price) .
D)   The sales forecast is revised downward by 10 percent.
E)   None of the above (all would cause average inventory to increase) .F) B) and D)
G) A) and B)

Question 6

The central goal of inventory management is to provide sufficient incentives to ensure that the firm never suffers a stock-out (i.e., runs out of an inventory item).

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not a reason for firms to own marketable securities?

Accepted Answer

A)   Marketable securities serve as a substitute for cash balances.
B)   Marketable securities offer a place to temporarily put cash balance to work earning a positive return.
C)   Marketable securities are used as a temporary investment to finance seasonal or cyclical operations.
D)   Marketable securities are used as a temporary investment to amass funds to meet financial requirements in the near future.
E)   Marketable securities are more liquid than cash balances.F) A) and C)
G) A) and B)

Question 8

Which of the following statements concerning the cash budget is true?

Accepted Answer

A)   Depreciation expense is not explicitly included, but depreciation effects are implicitly included in estimated tax payments.
B)   Cash budgets do not include financial expenses such as interest and dividend payments.
C)   Cash budgets do not include cash inflows from long-term sources such as bond issues.
D)   Answers a and b above.
E)   Answers a and c above.F) A) and C)
G) A) and D)

Exam 15: Managing Short-Term Assets

The central goal of inventory management is to provide sufficient incentives to ensure that the firm never suffers a stock-out (i.e., runs out of an inventory item).

Correct Answer
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Which of the following statements concerning the cash budget is true?

Correct Answer
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Which of the following would cause average inventory holdings to decrease, other things held constant?

Correct Answer
verified

The primary purpose of compensating balances required of borrowers is to compensate the bank in the event the borrower defaults on the loan.

Correct Answer
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Which of the following statements is correct?

Correct Answer
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Which of the following is not a reason for firms to own marketable securities?

Correct Answer
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Jumpdisk Company writes checks averaging R15,000 a day, and it takes 5 days for these checks to clear.The firm also receives checks in the amount of R17,000 per day, but the firm loses three days while its receipts are being deposited and cleared.What is the firm's net float in rands?

Correct Answer
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A lockbox plan is

Correct Answer
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Exam 15: Managing Short-Term Assets

The central goal of inventory management is to provide sufficient incentives to ensure that the firm never suffers a stock-out (i.e., runs out of an inventory item).

Correct AnswerverifiedShow Answer

Which of the following statements concerning the cash budget is true?

Correct AnswerverifiedShow Answer

Which of the following would cause average inventory holdings to decrease, other things held constant?

Correct AnswerverifiedShow Answer

The primary purpose of compensating balances required of borrowers is to compensate the bank in the event the borrower defaults on the loan.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Which of the following is not a reason for firms to own marketable securities?

Correct AnswerverifiedShow Answer

Jumpdisk Company writes checks averaging R15,000 a day, and it takes 5 days for these checks to clear.The firm also receives checks in the amount of R17,000 per day, but the firm loses three days while its receipts are being deposited and cleared.What is the firm's net float in rands?

Correct AnswerverifiedShow Answer

A lockbox plan is

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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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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