For a given firm, holding other factors constant, ordering costs per unit generally

decline as average inventory increases

One of the most popular uses of automated clearing houses is the

direct deposit of checks: FICA payments, gov't and private.

Which of the following is not a valid reason for holding cash?

to earn the highest return possi

Money market funds are accounts that

allow small investors to buy lg.-denomin. securities

If we can earn 13.5% on A/R, chose an action to finance this increase in our A/R balance ?

an increase in bank loans that would cost us 11.5%.

can be carried out with a futures contract.

Int'l cash management systems are more complex than domestic cash management systems because

Currencies change daily & have to be managed across borders

When using the economic order quantity model

costs are min. when carrying costs and ordering costs are =

The economic order quantity

is the lowest cost amount to order considering all costs

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Duplicate of BAC 300 Chapter 7

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A review of chapter 7 concepts

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Questions 19

Answers

1
Inventory is usually divided into three basic categories except
work in progress
projected sales
raw materials
finished goods
2
For a given firm, holding other factors constant, ordering costs per unit generally
are considered fixed costs
are negotiated
increase in proportion to increases in inventory.
decline as average inventory increases
3
A Just-In-Time (JIT) inventory mgt. program has all but which of the following requirements?
large safety stocks
close ties between suppliers, manufacturers, and customers
quality production
minimizing inventory levels
4
One of the most popular uses of automated clearing houses is the
collection of accounts receivable from customers
direct deposit of checks: FICA payments, gov't and private.
transfer of funds between U.S. banks and foreign banks.
transfer of funds between government agencies
5
Which of the following is not a factor influencing the selection of a marketable security?
safety
maturity
float
yield
6
The most subjective and significant segment of the 5 C's of credit for final approval is
conditions
character
collateral
capacity.
7
The corporate sweep account is an account that
allows lock box collections to earn interest
allows you to maintain zero balances
a and b are correct
allows you to write checks on zero balance accounts
8
Which of the following is not a valid reason for holding cash?
to earn the highest return possi
to satisfy emergency needs for funds
to meet transaction requirements
to provide a compensating balance for a bank
9
EOQ Exercise
463 units
147 units
327 units
207 units
10
How would electronic funds transfer affect the use of "float"?
Virtually eliminate its use
Decrease its use somewhat
Have no effect on its use
Increase its use somewhat
11
Money market funds are accounts that
allow small investors to buy shares in preferred stock
are high-yielding accts. used by corp. to finance operations
create pools of bonds held by large utility companies
allow small investors to buy lg.-denomin. securities
12
If we can earn 13.5% on A/R, chose an action to finance this increase in our A/R balance ?
an increase in accounts payable that would cost our firm 15%
a reduction in marketable securities that earn 14.2%.
decrease in inventories which are earning a 17.6% return.
an increase in bank loans that would cost us 11.5%.
13
3 policy variables to consider when extending credit include all of the following except
the terms of trade
collection policy
the level of interest rates
credit standards
14
Hedging
can be carried out with a futures contract.
is a way to protect your accounts receivable position
increases risk
legal agreement to buy or sell a financial futures contract
15
Int'l cash management systems are more complex than domestic cash management systems because
none of the above
many developing countries only use a cash payments system
Currencies change daily & have to be managed across borders
electronic funds transfer is more common more than the U.S.
16
When using the economic order quantity model
carrying costs decrease as the level of inventory increases
ordering costs increase as the level of inventory increases
none of the above
costs are min. when carrying costs and ordering costs are =
17
Probably the safest and most marketable instrument for short-term investment is
large denomination certificates
commercial paper
Treasury bills
Treasury notes
18
Which of the following is not a valid quantitative measure for A/R collection policies
average collection period
ratio of bad debts to credit sales
ratio of debt to equity
aging of accounts receivables
19
The economic order quantity
determines the reorder point
is the lowest cost amount to order considering all costs
determines the safety stock
all of the above

Duplicate of BAC 300 Chapter 7 Flashcards | StudBud