Working Capital Management And Policies

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Question 1

Free

Multiple Choice

The area of management concerned with designing and overseeing the process of production is which of the following?

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Production science

Production management

Operations management

Operations science

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Question 2

Free

Multiple Choice

A production strategy that attempts to improve a firm's return on investment by reducing in-process inventory and associated carrying costs as much as possible is which of the following?

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Production management

Operations management

Almost late

Just in time

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Question 3

Free

Multiple Choice

The inventory order quantity that minimizes total holding and ordering costs is which of the following?

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Barabus economic order quantity (EOQ)

Cornett economic order quantity (EOQ)

Operations management

Production management

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Question 4

Free

Multiple Choice

Which of the following is defined as costs associated with not having sufficient cash, inventory, or accounts receivable?

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Net working capital costs

Opportunity costs

Shortage costs

Cash cycle costs

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Question 5

Free

Multiple Choice

Which of the following is defined as the cost or forgone opportunity of using an asset already in use by the firm, or a person already employed by the firm, in a new project?

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Net working capital cost

Opportunity cost

Shortage cost

Cash cycle cost

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Question 6

Multiple Choice

To trace cash flows through the firm's operations, we must measure which of the following? (It is the time necessary to acquire raw materials, turn them into finished goods, sell them, and receive payment for them.)

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Cash cycle

Operating cycle

Transaction cycle

Production cycle

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Question 7

Multiple Choice

Operating cycle is measured as:

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inventory turns minus average collection period.

inventory turns plus average collection period.

days' sales in inventory minus average collection period.

days' sales in inventory plus average collection period.

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Question 8

Multiple Choice

Which of the following is NOT one of the five basic elements of the kaizen approach of productivity improvement?

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Teamwork

Improved morale

Quality circles

Suggestions for personal discipline

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Question 9

Multiple Choice

Choosing the optimal level of investment in each current asset type involves a trade-off between carry costs and:

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opportunity costs.

financing costs.

safety costs.

shortage costs.

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Question 10

Multiple Choice

Which of the following current asset financing policies reflects the decision to finance the peaks of current assets with long-term debt and equity that provides the firm with a surplus of cash and marketable securities most of the time, except during peak asset demand?

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Flexible financing policy

Restrictive financing policy

Compromise financing policy

Alternative financing policy

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Question 11

Multiple Choice

Which of the following current asset financing policies reflects the firm financing the seasonally-adjusted average level of asset demand with long-term debt and equity enabling it to use both short-term financing and short-term investing as needed?

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Flexible financing policy

Restrictive financing policy

Compromise financing policy

Alternative financing policy

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Question 12

Multiple Choice

For most businesses, particularly smaller ones, the most common way to cover a short-term financing need is to apply at a bank for which of the following?

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Commercial loan

Line of credit

Asset-based loan

Inventory loan

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Question 13

Multiple Choice

Which of these is the requirement of the firm to keep a certain percentage of the borrowed money deposited in the firm's bank accounts, whereby the bank agrees to lend money to the firm?

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Commercial loan

Line of credit

Compensating balance

Inventory loan

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Question 14

Multiple Choice

Which of these is a short-term loan secured by a company's assets?

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Commercial loan

Line of credit

Asset-based loan

Inventory loan

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Question 15

Multiple Choice

Which of these is an entity who will buy accounts receivable before they are due on a discounted basis, with the spread between the discounted price and the receivable's face value providing them with the expected compensation for both the time value of money and for the expected level of defaults amongst the accounts receivable?

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Commercial bank

Factor

Receiver

Blanket loaner

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Question 16

Multiple Choice

Which of the following is NOT an example of an inventory loan?

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Blanket inventory liens

Trust receipts

Field warehousing financing

Inventory factor

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Question 17

Multiple Choice

Which of the following is a money-market security, issued by large banks and medium-to-large corporations that matures in nine months or less?

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Banker's paper

Commercial paper

Banker's acceptance

Commercial acceptance

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Question 18

Multiple Choice

Which of the following is a short-term promissory note issued by a corporation, bearing the unconditional guarantee of a major bank?

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Banker's paper

Commercial paper

Banker's acceptance

Commercial acceptance

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Question 19

Multiple Choice

Which of the following is NOT a reason for holding cash?

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Transaction facilitation

Compensating balances

Investment opportunities

Transaction opportunities

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Question 20

Multiple Choice

Which of the following is NOT one of the Baumol Model's unrealistic assumptions?

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The firm has a constant, perfectly predictable distribution rate for cash.

No cash will come in during the period in question.

No allowance for any safety stock of extra cash to buffer the firm against unexpectedly high demand for cash.

No assumption to start from a replenishment level of cash then decline smoothly to a value of zero.

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