Short-term Financial Planning

This question bank verified by Studydeets

All Questions

Question 1

Free

True/False

When financial managers are asked the key reason for choosing short-term rather than long-term debt,they often say that they try to match the maturities of the firm's assets and liabilities.

Choose correct answer/s

True

False

Check answer

Question 2

Free

True/False

Biotech firms require large amounts of cash if their drugs succeed in gaining regulatory approval.Therefore,these firms often have substantial cash holdings to fund their possible investment needs.

Choose correct answer/s

True

False

Check answer

Question 3

Free

True/False

Unlike long-term planners short-term planners are concerned only with the most likely outcomes.

Choose correct answer/s

True

False

Check answer

Question 4

Free

True/False

Companies with unusually high cash reserves often hold the cash in tax havens.

Choose correct answer/s

True

False

Check answer

Question 5

Free

True/False

A company that sells goods to a customer on credit will see no immediate change in its cash position.

Choose correct answer/s

True

False

Check answer

Question 6

True/False

A company that pays $5,000 previously owed to one of its suppliers will see a $5,000 decrease in cash.

Choose correct answer/s

True

False

To unlock the question

Question 7

True/False

Most firms have a permanent investment in working capital.

Choose correct answer/s

True

False

To unlock the question

Question 8

True/False

A company that borrows $1 million short term and invests the proceeds in inventory will see its cash position unchanged.

Choose correct answer/s

True

False

To unlock the question

Question 9

True/False

Firms with a permanent investment in working capital finance that investment with short-term debt.

Choose correct answer/s

True

False

To unlock the question

Question 10

True/False

The term "tax inversion" refers to the negative tax shield that is created when a firm invests in securities.

Choose correct answer/s

True

False

To unlock the question

Question 11

True/False

Evidence suggests that investors place a particularly high value on liquidity in the case of companies with growth opportunities.

Choose correct answer/s

True

False

To unlock the question

Question 12

True/False

A company that sells $5 million of marketable securities will see a $5 million increase in cash.

Choose correct answer/s

True

False

To unlock the question

Question 13

True/False

The largest inflows of cash usually come from payments by the firm's customers.

Choose correct answer/s

True

False

To unlock the question

Question 14

True/False

Unless customers pay cash on delivery,cash flow comes from collections on receivables.

Choose correct answer/s

True

False

To unlock the question

Question 15

True/False

The primary aim of cash budgeting models is to obtain better forecasts of earnings.

Choose correct answer/s

True

False

To unlock the question

Question 16

True/False

If a firm reduces its accounts payable period,other things equal,it increases its cash holdings.

Choose correct answer/s

True

False

To unlock the question

Question 17

True/False

Firms with surplus cash can use it to increase dividends or buy back securities.

Choose correct answer/s

True

False

To unlock the question

Question 18

True/False

Short-term financing plans are usually developed by trial and error.

Choose correct answer/s

True

False

To unlock the question

Question 19

True/False

A reduction in inventory levels would be a source of cash.

Choose correct answer/s

True

False

To unlock the question

Question 20

True/False

Cash holdings decline when a firm buys raw materials on credit.

Choose correct answer/s

True

False

To unlock the question