Intro to Working Cap Management

Examples of traditional factors used in making a credit decision include which of the following? I. Capacity II. Capital III. Compliance IV. Character A. IV only B. I and III only "C. I, II, and IV only " "D. I, II, III, and IV"

"C. I, II, and IV only "

"A company is interested in lowering its overall banking costs, managing netting, pooling, re-invoicing, and centralizing FX exposure at headquarters. Which of the following options will accomplish this? " A. In-house banking B. Shared service center C. Company processing center D. Automated clearing house

A. In-house banking

An increasing number of multinational companies have adopted formal multilateral netting systems for which of the following reasons? A. To facilitate management of foreign exchange transactions B. To improve check clearing times C. To standardize payment routes and banking channels D. To eliminate duplicate payments to vendors

A. To facilitate management of foreign exchange transactions

Which of the following trade payment methods virtually eliminates the seller s credit risk? A. Bankers acceptance B. Cash before delivery C. Countertrade D. Consignment

B. Cash before delivery

What does a company with a restrictive current asset investment strategy typically have? A. High financing costs B. Low accounts receivable balances C. High inventory levels D. Low tax liabilities

B. Low accounts receivable balances

An international company would establish a re-invoicing center for which of the following reasons? A. To reduce its international balance reporting charges B. To manage the foreign exchange exposure of its foreign subsidiaries C. To take advantage of interest-bearing demand deposits D. To bring transaction exposures more closely in line with economic exposures

B. To manage the foreign exchange exposure of its foreign subsidiaries

"A company is based in the United States and has an operating subsidiary in Germany. With a stable U.S. dollar and a depreciating euro, the company s cash manager may elect to: " A. Pool excess funds in the United States to offset German deficits B. Implement a dollar-based multilateral netting system C. Start leading receivables from the German subsidiary D. Establish a multicurrency account in the United States

C. Start leading receivables from the German subsidiary