Assume a firm's production process requires an average of 80 days to go
from raw materials to finished products and another 40 days before the
finished goods are sold. If the accounts receivable cycle is 70 days and th
...
Assume a firm's production process requires an average of 80 days to go
from raw materials to finished products and another 40 days before the
finished goods are sold. If the accounts receivable cycle is 70 days and the
accounts payable cycle is 80 days, what would the operating cycle be?
Selected
Answer: 110
days
Correct
Answer: 110
days
Response
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Question 2
2.5 out of 2.5 points
In June, Erie Plastics had an ending cash balance of $35,000. In July, the
firm had total cash receipts of $40,000 and total cash disbursements of
$50,000. The minimum cash balance required by the firm is $25,000. At
the end of July, Erie Plastics had
Selected
Answer: An excess cash balance
of $0
Correct
Answer: An excess cash balance
of $0
Response
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Question 3
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2.5 out of 2.5 points
When determining the operating cycle, which of the following components
reduce the length of the cycle?
Selected
Answer: increases in the accounts payable
period
Correct
Answer: increases in the accounts payable
period
Response
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Question 4
2.5 out of 2.5 points
Which of the following would not normally be discussed when describing a
firm's operating cycle?
Selected
Answer: acquiring
financing
Correct
Answer: acquiring
financing
Response
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Question 5
2.5 out of 2.5 points
Which of the following is not an advantage of short-term borrowing?
Selected
Answer: frequent
renewals
Correct
Answer: frequent
renewals
Response
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Question 6
2.5 out of 2.5 points
A compensating balance on a bank loan effectively ____________ the cost of
the loan.
Selected
Answer: raise
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s
Correct
Answer: raise
s
Response
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Question 7
2.5 out of 2.5 points
Which of the following short-term sources of funds is available only to the
financially strongest concerns?
Selected
Answer: commercial
paper
Correct
Answer: commercial
paper
Response
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Question 8
2.5 out of 2.5 points
If a firm has positive net working capital, the current ratio is:
Selected
Answer: greater than
one
Correct
Answer: greater than
one
Response
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Question 9
2.5 out of 2.5 points
In order to borrow $100,000 for a 10% loan on discount basis, the firm will
actually have to borrow:
Selected
Answer: $111,1
11
Correct
Answer: $111,1
11
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Question 10
2.5 out of 2.5 points
Which would not be likely to be accepted as collateral for an inventory
loan?
Selected
Answer: vegetables at a grocery
store
Correct
Answer: vegetables at a grocery
store
Response
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Question 11
2.5 out of 2.5 points
The process of allocating funds among competing investment
opportunities is referred
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