FIN 420 FINAL EXAM CAPITAL
BUDGETING PORTFOLIO MANAGEMENT
AND RISK ANALYSIS TEST PAPER
COMPLETE REVIEW
●● current ratio
Answer: liquidity ratio that measures a company's ability to pay short
term obligations
●● quick ratio
Answer: indicator of company's short term liquidity position
- measures company's ability to meet short term obligations
●● net working capital
Answer: tells you how much money you have after you pay off your
liabilities
●● cash conversion cycle
Answer: time it takes to convert cash outflows from production into cash
inflows through the collection of accounts receivable
●● inventory conversion period
, Answer: length of time required to convert materials into finished goods
and then to sell those goods
●● days sales outstanding
Answer: # of days that sales are held in accounts receivables
●● days payable outstanding
Answer: average time that a company takes to pay its bills and invoices
to trade creditors
●● cash turnover
Answer: how fast a company conducts its operation
●● trade credit
Answer: - offered to increase sales
- offered to customers and suppliers (extended time to pay their
invoices)
●● discounts
Answer: companies will offer discounts to speed up cash coming in
●● advantages of offering trade credit
Answer: - can speed up collections
BUDGETING PORTFOLIO MANAGEMENT
AND RISK ANALYSIS TEST PAPER
COMPLETE REVIEW
●● current ratio
Answer: liquidity ratio that measures a company's ability to pay short
term obligations
●● quick ratio
Answer: indicator of company's short term liquidity position
- measures company's ability to meet short term obligations
●● net working capital
Answer: tells you how much money you have after you pay off your
liabilities
●● cash conversion cycle
Answer: time it takes to convert cash outflows from production into cash
inflows through the collection of accounts receivable
●● inventory conversion period
, Answer: length of time required to convert materials into finished goods
and then to sell those goods
●● days sales outstanding
Answer: # of days that sales are held in accounts receivables
●● days payable outstanding
Answer: average time that a company takes to pay its bills and invoices
to trade creditors
●● cash turnover
Answer: how fast a company conducts its operation
●● trade credit
Answer: - offered to increase sales
- offered to customers and suppliers (extended time to pay their
invoices)
●● discounts
Answer: companies will offer discounts to speed up cash coming in
●● advantages of offering trade credit
Answer: - can speed up collections
