Which of the following would not normally be discussed when describing a firm's operating cycle?
acquiring financing
Marketable securities are held primarily to meet:
precautionary motives
The willingness of a credit applicant to pay her or his bills is measured by?
Character
The principle of hedging calls for the matching of a firm's average:
maturities of its assets with its liabilities and equity
Working capital does not include:
property, plant, and equipment
Examples of regular cash outflows would not include:
All the above are regular cash outflows- materials purchases, rent, utility bills
The level of investment in accounts receivable depends on:
all of the above- credit analysis, credit terms, collection efforts
The time between when a payee sends payment and the funds are credited to the payee's bank account is called the:
collection float
Methods used to speed up collections include all of the following EXCEPT:
remote disbursement locations
Which one of the following asset accounts is not a part of a firm's working capital?
fixed assets
If a firm purchases materials on credit and thus has accounts payable, its cash conversion cycle will be:
shorter than its operating cycle
Which of the following marketable securities is sold at a discount throughout competitive bidding in a weekly auction?
U.S. Treasury bills
Deposits placed in foreign banks that remain denominated in U.S. dollars are called:
Eurodollars
Which of the following is not considered to be one of the five C's of credit analysis?
caution
Which one of the following is a private firm that operates as a credit-reporting agency?
Dun and BradStreet
In general, the more net working capital a company has
the lower the risk
In general, the less net working capital a company has
the greater the risk
Holding all other factors constant, if a firm increases its current assets relative to total assets,
has no effect on return and reduces risk
A negative cash conversion cycle indicates that the
average payment period exceeds the operating cycle
These are short-term money market investments that are extremely safe and liquid; they can be quickly converted into cash at values very close to their intrinsic values.
marketable securities
The factoring of receivables:
typically has the factor becoming the firm's credit department
The small business administrative
lends to businesses with reasonable prospects of repayment but which cannot obtain credit through private channels
commercial finance companies:
are primarily interested in loans secured by a business customer's accounts receivable and inventories
The bank line of credit is:
the loan limit that a bank has established for a business customer
Compensating balances at a commercial bank are:
account balances required in connection with unsecured business loans under bank lines of credit
A revolving credit agreement is a:
banker's standby agreement to provide a guaranteed line of credit for a specified period of time.
Which of the following short-term sources of funds is available only to the financially strongest concerns?
Commercial paper
The largest providers of short-term financing are:
Commercial banks
A commercial finance company:
may make loans secured by chattel mortgages
The small business administration cannot assist in the financing of small enterprises by:
engaging in accounts receivable factoring
Which of the following organizations are involved in accounts receivable financing for businesses?
commercial finance companies and factors
If a firm has positive net working capital, the current ratio is:
greater than one
Spontaneous financing refers to:
financing provided by accounts payable and accrued capabilities
Net working capital is defined as:
current assets less current liabilities
Permanent current assets are:
the level of current assets needed to support sales
Which of the following are typical financing strategies used by businesses?
maturity matching, aggressive financing, and conservative financing
Which of the following operating characteristics affect a firm's short-term financing strategy?
all of the above- industry and company factors, seasonal variation, sales trend, and cyclical variations
A short-term bank loan that is unsecured is referred to as:
a line of credit
An organization that engages in accounts-receivable financing by purchasing the accounts outright is referred to as a:
factor
Large U.S. corporations of high credit quality can issue or sell short-term promissory notes called:
commercial paper
The small business administration cannot assist in the financing of small enterprises by:
engaging in accounts receivable factors
commercial finance companies:
may makes loaned secured by chattel mortgages