TM - Chapter 10 Quiz

Examples of traditional factors used in making a credit decision include which of the following? I. Capacity II. Capital III. Compliance IV. Character

I, II, and IV only

"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: "

Start leading receivables from the German subsidiary

An increasing number of multinational companies have adopted formal multilateral netting systems for which of the following reasons?

To facilitate management of foreign exchange transactions

An international company would establish a re-invoicing center for which of the following reasons?

To manage the foreign exchange exposure of its foreign subsidiaries

Which of the following trade payment methods virtually eliminates the seller s credit risk?

cash before delivery

"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? "

in-house banking

What does a company with a restrictive current asset investment strategy typically have?

low accounts receivable balances