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

Currencies change daily & have to be managed across borders

The economic order quantity

is the lowest cost amount to order considering all costs

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.

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

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

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

decline as average inventory increases

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

to earn the highest return possi

When using the economic order quantity model

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

Money market funds are accounts that

allow small investors to buy lg.-denomin. securities

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

Duplicate of BAC 300 Chapter 7 Flashcards | StudBud