Chapter 16
Uses of cash can involve increasing a(n) ______ account.
1.) Non cash current asset 2.) Fixed asset
Receivables period equals _____ days divided by the receivables turnover.
365
The payables period equals ___ days divided by the payables turnover.
365
What does an average collection period of 57 mean?
Customers took, on average, 57 days to pay.
True or false: The collection cycle is the difference between disbursement and collection of cash.
False
True or false: The payables turnover equals the cost of goods sold divided by the average payables.
True
A flexible short-term financing strategy implies ______.
a relatively large pool of marketable securities cash surpluses
The two types of accounts receivable financing are ______ and ______.
assignment and factoring
The opportunity costs of holding current assets are called ______ costs.
carrying
The primary tool in short-term financial planning is the ______.
cash budget
The time between paying cash for inventory and receiving cash from selling a product is called the ______.
cash cycle
Ending accounts receivable equals starting accounts receivable plus ______ minus collections.
credit sales
Commercial paper is an example of a(n) ______.
debt security
Sources of cash can involve increasing a(n) ______ account.
equity, liability
A short-term financial policy involving a higher proportion of long-term debt than short-term debt is classified as a(n) _____ policy.
flexible
Which of the following are activities that increase cash?
increasing long-term debt decreasing fixed assets
The operating cycle is composed of which periods?
inventory period accounts receivable period
A lack of safety reserves can lead to which of the following?
lost customer goodwill lost sales
Firms who attempt to match the maturity of assets and liabilities are said to employ ______.
maturity hedging
The difference between cash collections and cash disbursements is the predicted ______.
net cash inflow
Which activities are primary to short-term finance?
operating activities financing activities
Which of the following represents a use of cash?
repurchasing stock accounts receivable increases paying off a loan
Which of the following are shortage costs?
safety reserve costs order costs
Which of the following activities by a firm will increase cash?
selling stock selling bonds obtaining a loan
Ideally, short-term assets are financed with ______.
short term liabilties
The cash budget allows the firm to identify Blank______.
short-term financial opportunities short-term financial needs
Those firm activities that increase cash are called ______.
sources of cash
Under a conventional factoring, _______
the collection of the receivables is the responsibility of the seller the receivables are sold at a discount