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FINC400/ FINC400 Week 3 Quiz

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Question 1 of 25 4.0 Points As a general rule, it is desirable to finance the permanent assets, including “permanent current assets”, with long-term debt and equity. True False Question 2 of 25 Short-term interest rates are generally lower than long-term interest rates. A. True B. False Question 3 of 25 4.0 Points Commercial bank term loans A.usually carry fixed interest rates. B.are very short-term in nature. C.are offered to superior credit applicants. D.both b and c. Question 4 of 25 4.0 Points Dun & Bradstreet is known for providing A.interest rate information to cash managers. B.credit scoring reports that rank a company’s payment habits relative to its peer group. C.cash management systems to corporate treasurers. D.consumer credit reports to credit card companies Question 5 of 25 4.0 Points Small companies finance a relatively greater proportion of their assets through trade credit than do larger concerns. A. True B. False Question 6 of 25 4.0 Points A financial executive devotes the most time to A.Long-range planning. B.Capital budgeting. C.Short-term financing. D.Working capital management. Question 7 of 25 4.0 Points Short-term financing is risky because of the possibility of rising short-term rates and the inability of always being able to refund short-term debt. A. True B. False Question 8 of 25 4.0 Points From the banker’s point of view, short-term bank credit is an excellent way of financing A.fixed assets. B.permanent working capital needs. C.repayment of long-term debt. D.seasonal bulges in inventory and receivables. Question 9 of 25 4.0 Points One of the first considerations in cash management is A.to have as much cash as possible on hand. B.synchronization of cash inflows and cash outflows. C.profitability. D.to put any excess cash into accounts receivable. Question 10 of 25 4.0 Points Cash balances are usually determined by the amount of cash flowing through the firm on a yearly basis. True False Question 11 of 25 4.0 Points Seasonal production allows for maximum efficiency in machinery and manpower use. A. True B. False Question 12 of 25 4.0 Points Even during slack loan periods, banks will never loan out money at an interest rate lower than the prime rate because the prime rate is their best rate. A. True B. False Question 13 of 25 4.0 Points The use of cash budgeting procedures A.helps the firm plan its current asset levels for a given production plan. B.makes managing inventory easier under seasonal production. C. illustrates fluctuating levels of current assets for a given production plan. D. all of these are correct. Question 14 of 25 4.0 Points Permanent current assets are not similar to fixed assets because they are fully liquidated within the year. A. True B. False Question 15 of 25 4.0 Points Modos Company has deposited $3,500 in checks received from customers. It has written $1,400 in checks to its suppliers. The initial bank and book balance was $600. If $1,600 of its customer s checks have cleared but only $600 of its own, calculate its float. A.$1,200 B.$1,100 C.$300 D.$700 Bank balance = $600 + $1.600 – $600 = $1,600 Book balance = $600 + $3,500 – $1,400 = $2,700 Float = $1,100 Question 16 of 25 4.0 Points A Just-In-Time (JIT) inventory management program has all but which of the following requirements? A.quality production B.large safety stocks C.close ties between suppliers, manufacturers, and customers D.minimizing inventory levels Question 17 of 25 4.0 Points Because of changing economic conditions, it is difficult for companies such as Dun & Bradstreet to devise models predicting payment problems and probability of bankruptcy 12 months in the future. A. True B. False Question 18 of 25 4.0 Points A trade discount is a percentage reduction from the invoice price given for purchasing certain

FINC400/ FINC400 Week 3 Quiz

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