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1) Which of the following tends to vary spontane...

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1) Which of the following tends to vary spontaneously with changes in the level of sales? Answer 1. accounts payable 2. plant 3. long-term debt 4. paid-in capital 2) The percent of sales method of forecasting assumes which of the following is constant? Answer: 1. accounts payable as a percent of total assets 2. equity as a percent of sales 3. inventory as a percent of sales 4. long-term debt as a percent of total assets 3) Over-estimation of the required level of assets will 1. cause the firm to acquire excess finance 2. reduce the firm's profitability 3. increase the firm's equity Answer 1. 1 and 2 2. 1, 2, and 3 3. 1 and 3 4. 2 and 4) Inventory as a percent of sales tends to increase with increases in sales. Answer 1. False 2. True 5) Long-term assets such as plant spontaneously vary with sales. Answer 1. False 2. True 6) As a firm expands, which of the following is an automatic source of finance? Answer 1. accounts payable 2. bank loans 3. long-term debt 4. mortgage loans 7)If a firm's sales increase by 50 percent and inventory was $100,000, according to the percent of sales method of forecasting inventory will be Answer 1. $100,000 2. $175,000 3. $120,000 4. $150,000 8)If a firm distributes a larger proportion of its earnings, the external need for finance is reduced. Answer 1. False 2. True 9)Underestimation of the level of assets needed may Answer 1. cause the firm to have excess financing 2. cause the firm to increase sales 3. result in higher earnings 4. cause the firm to have insufficient finance 10) Which of the following assets do not spontaneously vary with the level of sales? 1. accounts receivable 2. equipment 3. plant Answer 1. 1 and 2 2. 1, 2, and 3 3. 2 and 3 4. 1 and 3 11)Credit policy requires 1. establishing the terms of credit 2. determining to the amount of any discount 3. determining the collection policy Answer 1. 2 and 3 2. 1 and 2 3. 1, 2, and 3 4. 1 and 3 12) A firm with excess cash needs the funds for a payment after three months, the funds should not be invested in Answer 1. negotiable certificates and Treasury bills 2. commercial paper and repurchase agreements 3. bankers' acceptances and commercial paper 4. Treasury bills and Treasury bonds 13) Which of the following decreases the firm's net working capital? Answer 1. increasing the allowance for doubtful accounts 2. selling inventory on credit 3. distributing a stock dividend 4. paying accrued wages 14)Aging accounts receivable Answer 1. increases the firm's cash 2. requires a more lenient credit policy 3. decreases the firm's inventory 4. shows which accounts are slow payers 15) A firm currently has sales of $2,000,000 and does not offer credit. Management expects sales to rise to $2,500,000 if it offers customers thirty days to pay. Which of the following will probably happen? 1. receivables will turn over more rapidly 2. receivables will turn over more slowly 3. credit sales will increase by more than the increase in sales 4. credit sales will increase by less than the increase in sales Answer 1. 2 and 3 2. 1 and 3 3. 1 and 4 4. 2 and 4 16) Credit policy requires establishing Answer 1. the minimum level of inventory 2. the optimal level of inventory 3. the average collection period 4. the terms of enforcement 17) If a firm has excess cash that it will need after a period of four months, the financial manager may acquire 1. negotiable certificates of deposit 2. Treasury bills 3. commercial paper Answer 1. 1 and 3 2. 1, 2, and 3 3. 1 and 2 4. 2 and 3 18) Which of the following argues against extending credit? 1. increased collection expense 2. reduced collection expense 3. increased bad debt expense 4. reduced bad debt expense Answer 1. 1 and 3 2. 1 and 4 3. 2 and 4 4. 2 and 3 19) The matching principle suggests that 1. equipment should be financed with long-term sources 2. current assets may be financed with short-term sources 3. plant should not be financed with short-term sources Answer 1. 1, 2, and 3 2. 1 and 2 3. 1 and 3 4. 2 and 3 20) The lower the rate of interest, the smaller is Answer 1. the economic order quantity 2. the cost of carrying inventory 3. the safety stock 4. the number of units sold 21)Firm XX has the following accounts receivable: Receivable Amount Due: Days outstanding: A $11,000 10 B $13,456 35 C $23,110 42 D $13,222 62 E $ 9,776 31 The firm sells on credit and requires payment on the thirtieth day. What proportion of its sales are overdue and what proportion are more than ten days overdue? 22) What are the discount yield and the true annual yield on a six-month, $10,000 Treasury bill purchased for $9,589

 

Paper#13696 | Written in 18-Jul-2015

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