Ch.6 T/F
The three most important factors when selecting a financing plan are risk, asset liquidity, and timing.
True
A "risky" financial plan will use long-term financing for fixed assets, permanent current assets, and a portion of temporary current assets.
False
According to the expectations hypothesis, when long-term interest rates are higher than short-term interest rates, long-term rates are expected to decline.
False
Ideally, permanent current assets should be financed exclusively with short-term borrowings
False
It is not necessary to understand interest rate movements when deciding the structure of short-term debt relative to long-term debt.
False
Liquidating current assets is like liquidating fixed assets since they have lives greater than one year.
False
Long-term financing is usually less expensive than short-term financing because firms have longer periods of time to pay off long-term debt.
False
Working capital management is relatively unimportant for a small business.
False
During tight money periods, short-term financing may be difficult to find.
True
Increased use of long-term financing is generally a more conservative approach to current asset financing.
True
One of the primary benefits of implementing supply chain management is reducing inventory on hand.
True
The "term structure of interest rates" refers to the relationship between yields on debt and their maturities.
True
The cash budget combines the cash receipts and cash payments schedules in determining cash flow.
True