01 Jan A. 1) a collection agency,

Part 1 of 2 – 42.5/ 50.0 Points

Question 1 of 40

2.5/ 2.5 Points

The amount of sales a company predicts is a function of two types of data. Which of the types below is one of these two types?

A. Accounting data

B. Internal data

C. Rationing data

D. Legal data

Question 2 of 40

2.5/ 2.5 Points

For March, Heavenly Hotel will have cash receipts of $365,000 and cash disbursements of $370,000. If its beginning cash is $4,000 and its reserves are $3,000, what will be its shortfall in cash for the month?

A. There is no shortfall in cash, but an excess of cash.

B. -$3,000

C. -$4,000

D. -$5,000

Question 3 of 40

0.0/ 2.5 Points

A company estimates the following expenditures: total shipping costs of $1,100; wages paid to workers of $9,600; overhead costs of $4,300; raw materials of $5,000; and, dividends and interest paid of $2,200. What are the total production costs?

A. $22,200

B. $21,100

C. $20,100

D. $20,000

Question 4 of 40

2.5/ 2.5 Points

Which of the below is a use of cash?

A. Credit Sales

B. Retirement of debt (paying off loans and bonds)

C. Bank loans

D. Cash sales of equipment or other assets of the company

Question 5 of 40

2.5/ 2.5 Points

An aspect of __________ is forecasting operating cash flow and ultimately the profitability of the company in the coming period.

A. short-term financial planning

B. medium-term financial planning

C. long-term financial planning

D. short-term financial investing

Question 6 of 40

2.5/ 2.5 Points

Managers know that for cash and credit sales completed in one month that all will be recorded as sales revenue in that month, but that the actual cash flow will take place over a longer period of time because of:

A. credit sales.

B. erosion.

C. foreclosure.

D. transit time.

Question 7 of 40

2.5/ 2.5 Points

The amount and timing of sales are usually provided by the __________ department.

A. advertising or finance

B. accounting or sales

C. sales or marketing

D. marketing or planning

Question 8 of 40

2.5/ 2.5 Points

?Short-term decisions are viewed as decisions that have short-term impacts and can be changed or modified at:

A. relatively low costs.

B. relatively high costs.

C. relatively high time requirements.

D. relatively low costs with high time requirements.

Question 9 of 40

2.5/ 2.5 Points

Financial forecasts are seldom right on the money, so to speak, but they do provide a yardstick by which a company can measure:

A. its past adherence to its long-term plan.

B. its past deviation from its long-term plan.

C. its adherence to or deviation from its short-term plan.

D. its current deviation from its future plan.

Question 10 of 40

2.5/ 2.5 Points

There are a variety of ways to produce pro formas, but they usually rely on two primary inputs. One of these primary inputs is:

A. the projected sales for the coming year.

B. the projected sales for the past year.

C. next year’s financial statements.

D. this year’s financial statements.

Question 11 of 40

2.5/ 2.5 Points

NorWest Outdoor Store will have cash receipts of $47,000 in December and cash disbursements of $41,000 for this month. If its beginning cash is $7,000 and its reserves are $4,000, what will its excess be for December?

A. There is no excess, but a shortfall.

B. $6,000

C. $9,000

D. $13,000

Question 12 of 40

2.5/ 2.5 Points

There are two primary tools used to forecast and set in action a company plan. Which of the tools below is one of these?

A. Statements of retained earnings

B. Profit budgets

C. Income statements

D. Pro forma statements

Question 13 of 40

0.0/ 2.5 Points

In the daily planning for cash or the cash forecast, we want to hone in on the management of cash as it applies to the __________ of the company.

A. short-term borrowing and long-term investing

B. long-term borrowing and short-term investing

C. short-term borrowing and short-term investing

D. long-term borrowing and long-term investing

Question 14 of 40

2.5/ 2.5 Points

Forecasting entails drawing a financial picture of a company for the:

A. year.

B. month.

C. quarter.

D. All of the above

Question 15 of 40

2.5/ 2.5 Points

__________ consists of items such as number of sales personnel in the field and average sales per representative, competitors and alternative products, and production capabilities and schedules, as well as other factors known mainly to the company.

A. External data

B. Product data

C. Employee data

D. Internal data

Question 16 of 40

0.0/ 2.5 Points

Short-term financial planning typically uses forecasted:

A. earnings.

B. income statements.

C. working capital statements.

D. All of the above

Question 17 of 40

2.5/ 2.5 Points

We start the process of building a cash forecast with predicting the cash inflow from future sales. This is called:

A. a sales forecast.

B. a cash forecast.

C. a monetary forecast.

D. a revenue forecast.

Question 18 of 40

2.5/ 2.5 Points

The goal of the daily management of cash is to have sufficient cash on hand to pay the bills without carrying:

A. excess debt

B. excess sunk costs

C. excess depreciation

D. excess cash

Question 19 of 40

2.5/ 2.5 Points

Which one of the costs below is NOT a production cost?

A. The wages paid to workers

B. The raw materials for manufacturing products

C. The dividends paid to shareholders

D. The shipping costs that get the product to the customer

Question 20 of 40

2.5/ 2.5 Points

__________ consists of items such as the current interest rates, housing starts, gross national product (GNP), disposable income estimates, or other economic indicators.

A. Accounting data

B. Internal data

C. External data

D. Financial data

Part 2 of 2 – 42.5/ 50.0 Points

Question 21 of 40

2.5/ 2.5 Points

When a company deals only in cash, the cash conversion cycle becomes:

A. the collection cycle.

B. the payable cycle.

C. the production cycle.

D. the collection cycle – the payable cycle.

Question 22 of 40

2.5/ 2.5 Points

Which of the following is a consideration when a company decides which customers should receive credit?

A. The amount of potential business from the customer

B. The credit policies of competing firms

C. The results of credit screening

D. All are considerations that the company takes into account.

Question 23 of 40

0.0/ 2.5 Points

Lipscomb is set to establish a reorder policy for his remote snack bar located on Vacation Island. He sells 10 cases of soda per day and has a lead time for delivery of one week. Occasionally, bad weather or mechanical difficulty can delay his delivery by up to three days. At what point should Lipscomb reorder (how many cases on hand) if he wants to also compensate for unexpected order delays?

A. 30 cases

B. 70 cases

C. 100 cases

D. There is not enough information to answer this question.

Question 24 of 40

2.5/ 2.5 Points

The company offering a discount on accounts payable is trying to __________, and the firm that pays on time rather than take a discount is attempting to __________.

A. speed up cash outflow; slow down cash inflow

B. speed up cash inflow; slow down cash inflow

C. speed up cash inflow; slow down cash outflow

D. speed up cash outflow; slow down cash outflow

Question 25 of 40

2.5/ 2.5 Points

Under __________, companies work with both their suppliers and their customers to reduce the time items are in inventory and the amount of inventory carried by a company.

A. ABC inventory management

B. EOQ inventory management

C. federal procurement programs

D. JIT inventory management

Question 26 of 40

2.5/ 2.5 Points

The Hannibal Homers minor league baseball club is considering an expansion of its stadium to increase capacity by 2,000 seats. Management estimates increased revenue from ticket and concession sales to be $600,000 per year for the next 5 years. The cost of expansion is $750,000, with an additional $50,000 in working capital. The working capital increase is permanent (will not be recovered after 5 years). Annual costs are expected to increase by $200,000 per year, the club’s cost of capital is 14%, and its tax rate is 30%. If the stadium addition is depreciated in a straight line to a value of $0.00 over 5 years, what is the IRR of this project? (Ignore any revenues or costs associated with a terminal value of the project after five years.) Use a financial calculator to determine your answer.

A. 9.41%

B. 14.00%

C. 25.33%

D. 29.45%

Question 27 of 40

2.5/ 2.5 Points

A __________ inventory item is an item that is not used in current operations but is serving a backup role in case the current item fails during operation.

A. Type C

B. redundant

C. reticent

D. beta generation

Question 28 of 40

0.0/ 2.5 Points

In terms of the float, the buyer of a product wants to __________ and the seller wants to __________.

A. increase the collection float; decrease the disbursement float

B. decrease the disbursement float; decrease the collection float

C. decrease the collection float; decrease the disbursement float

D. increase the disbursement float; decrease the collection float

Question 29 of 40

2.5/ 2.5 Points

EOQ equals:

A.

B.

C.

D.

Question 30 of 40

2.5/ 2.5 Points

__________ is the collective term used to describe a firm’s decisions as to how customers will qualify for credit, what payment plan is allowed to creditors, and how overdue bills will be collected.

A. Credit history

B. Credit policy

C. Collection policy

D. Payment policy

Question 31 of 40

0.0/ 2.5 Points

An important objective of cash management is to __________ the disbursement float and __________ the collection float.

A. lengthen; reduce

B. lengthen; lengthen

C. reduce; reduce

D. reduce; lengthen

Question 32 of 40

2.5/ 2.5 Points

Which of the following does NOT reduce the length of time of collection float for a firm?

A. Direct payment via online checking

B. The firm paying suppliers with a credit card

C. Lockboxes

D. Electronic fund transfers (ETF)

Question 33 of 40

2.5/ 2.5 Points

Extending credit to a customer has three major components:

A. a policy on how customers will qualify for credit, a policy on the payment plan allowed creditors, and a policy for collecting overdue bills.

B. a policy on how customers will qualify for credit, a policy on paying commissions on sales, and a policy for collecting overdue bills.

C. a policy on how customers will qualify for credit, a policy on the payment plan allowed creditors, and a policy on accounting for depreciation.

D. a policy on how customers will qualify for credit, a policy on accounting for depreciation, and a policy on paying commissions on sales.

Question 34 of 40

2.5/ 2.5 Points

EOQ focuses on the tradeoff between:

A. carrying costs and delivery costs.

B. seasonality and steady production.

C. carrying costs and ordering costs.

D. fixed and variable costs.

Question 35 of 40

2.5/ 2.5 Points

Ready Tees, an online retailer of t-shirts, orders 100,000 t-shirts per year from its manufacturer. The cost of ordering and delivery is $100 per order. If Ready Tees orders 6,667 t-shirts in each order, what are the firm’s total annual ordering costs (rounded to the nearest dollar)?

A. $2,000

B. $1,500

C. $1,000

D. $667

Question 36 of 40

2.5/ 2.5 Points

__________ is additional inventory kept on hand so that if an order is delayed in arrival the current inventory is sufficient to cover the delay.

A. Excess inventory

B. Safety stock

C. Stock overage

D. Type A

Question 37 of 40

2.5/ 2.5 Points

Jolly Roger Kite Company has a payment cycle of 17 days, a collection cycle of 31 days, and a production cycle of 12 days. What is the average cash conversion cycle for the Jolly Roger Company?

A. 2 days

B. 36 days

C. 26 days

D. 60 days

Question 38 of 40

2.5/ 2.5 Points

Estimating __________ is one part of managing short-term cash needs. The second part is estimating __________.

A. cash inflow, accounts payable

B. cash inflow, cash outflow

C. accounts receivable, cash outflow

D. accounts receivable, cash inflow

Question 39 of 40

2.5/ 2.5 Points

Total carrying cost equals:

A. the average carry cost per item times the maximum level of inventory.

B. the average carry cost per item times the minimum level of inventory.

C. the average carry cost per item times the average level of inventory divided by 2.

D. the average carry cost per item times the average level of inventory.

Question 40 of 40

2.5/ 2.5 Points

Which of the following choices lists the least to most aggressive actions in the pursuit of overdue debt?

A. 1) a collection agency, 2) court action, 3) a letter requesting overdue payment

B. 1) court action, 2) a collection agency, 3) a letter requesting overdue payment

C. 1) a letter requesting overdue payment, 2) court action, 3) a collection agency

D. 1) a letter requesting overdue payment, 2) a collection agency, 3) court action