Treasury Management Quiz Review

which is not a source of cash for a company? depreciation expense increase in A/R decrease in inventory deferring A/P for later

a/r

The Glass Steagall Act was basically repealed through which act of Congress?

allowing financial holding companies

The Quantitative Easing done by the Federal Reserve during the great recession used which monetary policy tool?

buying bonds

all of these are attributes of jumbo CDs except: A. CDs must be held to maturity B. They are negotiable instruments with a secondary market "C. The minimum denomination is $100,000" D. The funds invested are exposed to bankruptcy risk over the FDIC amount

cd's must be held to maturity

important with regards to treasury activities because the treasury deals with all cash of the corporation/company

checks and balances

in evaluating alternative capital investments, a company should consider qualitative factors such as:

corporate strategy

EML Inc., which has $600 million in outstanding debt, is preparing to issue commercial paper in excess of $100 million within the next six months. The new assistant treasurer has recently spent time getting to know the issuing and paying agent, the rating agency analyst, and the legal counsel, and has been following the financial markets. What is this is an example of?

external collaboration

"The treasury manager of a chain of clothing stores wants to develop a medium-term forecast. Management plans to open two new stores, and anticipates same-store sales to increase by 15%. Which of the following items can be predicted with the highest degree of certainty? "

fixed bond interest payments

A main characteristic of a company with regional offices using a centralized treasury function

high control

Company XYZ is a manufacturer of industrial equipment and has enjoyed a large percentage increase in profits from a small increase in revenues. Sales recently plummeted resulting in steep decline in profitability. Which of the following BEST describes the cost structure of the company?

high operating leverage

a retail brokerage firm is most like which one of the following types of FI's?

investment banks

In case of bankruptcy, what is the order of payment for the following: 1-Bankruptcy Trustee, 2-Senior Debt, 3- Common Shareholders, 4-Taxes owed, 5-Subordinated bond holders

21453

what is the days receivables? Annual Revenue $158,000.00 Annual Cost of Goods Sold $92,400.00 Cash Flow from Operations $850.00 Ending Inventory $23,600.00 Ending Accounts Receivable $19,300.00 Ending Accounts Payable $16,950.00 DRO = receivables x 365 / revenue = 19300 * 365 / 158000 = 44.58

44.59

examples of fixed assets include which of the following? I. inventory II. t-bills III. forklift IV. goodwill

III only

a type of underwriting that is most risky to the company putting out the public offering

best efforts underwriting

not permitting MMF to go below $1 NAV in most circumstances

breaking the buck

a corporate director with *no material ties* to the corporation

independent

The Monetary Control Act of 1980 assisted in loosening the economy by

reducing float in the payment system

all of the following are advantages of using traditional financial ratios for analysis except: easily computed reflect accounting values used to view historical trends allow comparison b/w like companies

they usually reflect accounting rather than economic values

what is the service a commercial bank traditionally does not make money from?

underwriting ipo

when it comes to audit opinions, firms would like unqualified adverse disclaimed qualified with explanation

unqualified

"Company R has an AR collection pattern of 8% in the current month, 47% in the first month, 30% in the second month, 10% in the third month, and 5% in the fourth month. If AR for July is $598,000, what amount of cash do they expect to collect in October

59,800

what is the day's payables? Annual Revenue $158,000.00 Annual Cost of Goods Sold $92,400.00 Cash Flow from Operations $850.00 Ending Inventory $23,600.00 Ending Accounts Receivable $19,300.00 Ending Accounts Payable $16,950.00 DPO = a/p x 365 / cogs = 16950x365/92400 = 66.96

66.96

what is the days inventory? Annual Revenue $158,000.00 Annual Cost of Goods Sold $92,400.00 Cash Flow from Operations $850.00 Ending Inventory $23,600.00 Ending Accounts Receivable $19,300.00 Ending Accounts Payable $16,950.00 DIO = inventory x 365 / cogs = 23,600 *365 / 92400 = 93.22

93.23

"A company is experiencing the following long-term trend on a month-over-month basis: Sales are increasing by $100,000, a 15% increase. Accounts receivable are increasing by $5,000, a 1% increase. Accounts payable are increasing by $20,000, a 4% increase. Labor expenses are increasing by $40,000, a 3% increase. With all other income, expenses, long-term assets and liabilities remaining stable, this trend would MOST LIKELY prompt what action by the company?

repaying short term debt

The most common way that companies structure their treasury operations is as a:

cost center

Which of the following is a ratio that is often used by commercial banks to measure a company's leverage and does NOT include the effect of assets that are difficult to value or are not easily converted to cash?

debt to tangible net worth

which of the following are important uses of variance analysis in comparing actual cash flows with projected cash flows? I. Identifying unanticipated changes in inventory II. Enhancing short-term investment income III. Validating a capital budget IV. Identifying delays in accounts receivable collections

i and iv

"MCA, Inc. upgraded the treasury workstation that had been in place for two years and used data from that 24-month period to develop a new short-term forecast. A trend factor was applied to controlled disbursements of 97% on a month-by-month basis and the variance to actual disbursements is less than 1%. Which of the following model validation techniques was utilized? "

in sample validation

financing decisions in a budget are used to construct all of the following pro forma financial statement components except: A. Debt B. Interest expense C. Shareholder s equity D. Inventory

inventory

"A daily short-term forecast and variance analysis for LMN, Inc. is updated with relevant trends and actual data every Monday. Upon review, the treasurer assessed that sales were higher than forecasted, inventory was up and yields being earned on excess cash were lower. The MOST important reason for this cash forecast process is: "

liquidity management

(in regards to accrual accounting) recognize expenses incurred to generate earned revenues

matching principle

An analyst for a landscaping company wants to adjust her cash-flow forecast to account for the seasonality of outflows. How can this be accomplished?

regression analysis

when utilizing a factor to sell your receivables, all could be true except: A. You will sell the receivables at a discount off of face amount B. They must be sold without recourse back to the selling company C. Factors can have recourse back to the selling company if customers do not pay D. Factoring can assist in raising cash for a company

must be sold without recourse

"Company ABC is a restaurant chain that has enjoyed a surge in customers dining with not much of a profitability increase in the last couple of years. Following a bad restaurant review, customer traffic deteriorated with not much change in profitability. Which of the following BEST describes the cost structure of the company? "

low operating leverage