Managerial Week 6 Exam Questions and Answers Fully Solved
What must a firm consider regarding its net working capital? - AnswersWhat is the ideal level of current
assets?
How can a firm get others to finance its current assets?
What other costs will be incurred if shortage costs are lowered?
Which one of these will increase the cash cycle, all else held constant? - AnswersDecreasing the average
payment period.
A firm has 42 days of sales in inventory. It has $6,200 in accounts receivable and $7100 in accounts
payable. sales are $21,200 and cost of goods sold is $12,300. How is the cash cycle computed? -
Answers42 days +(($6,200x365)/$21,200)-(($7100X365)/$12,300)
Which of these are shortage costs? - AnswersDenying credit to a credit worthy customer
Overnight delivery cost for an out-of-stock item.
which of these correctly defines a variable used in the Baumol model formulas - AnswersT-Annual
demand for cash
C=Replenishment level
F-Trading cost per transaction
i-interest rate on marketable securities
Which one of these is not considered by either the Baumol or the Miller-Orr models? - AnswersA
compensating balance requirement may be an average value, not a set minimum requirement.
Which of these are carrying costs? - AnswersRenting a a warehouse for inventory storage
Paying for inventory insurance.
What does the formulas (2 TFi)1/2 compute - AnswersTe cash replenishment level that minimizes the
annual cash management costs
Which of these apply to a compromise financing policy as compared to either a restrictive or a flexible
policy? - AnswersLess investment in marketable securities than with a flexible policy
Less short-term financing than with a restrictive policy.
What is the cash cycle? - AnswersThe time between a firm paying for raw materials and collecting
payment from the sale of the product made from those materials
What must a firm consider regarding its net working capital? - AnswersWhat is the ideal level of current
assets?
How can a firm get others to finance its current assets?
What other costs will be incurred if shortage costs are lowered?
Which one of these will increase the cash cycle, all else held constant? - AnswersDecreasing the average
payment period.
A firm has 42 days of sales in inventory. It has $6,200 in accounts receivable and $7100 in accounts
payable. sales are $21,200 and cost of goods sold is $12,300. How is the cash cycle computed? -
Answers42 days +(($6,200x365)/$21,200)-(($7100X365)/$12,300)
Which of these are shortage costs? - AnswersDenying credit to a credit worthy customer
Overnight delivery cost for an out-of-stock item.
which of these correctly defines a variable used in the Baumol model formulas - AnswersT-Annual
demand for cash
C=Replenishment level
F-Trading cost per transaction
i-interest rate on marketable securities
Which one of these is not considered by either the Baumol or the Miller-Orr models? - AnswersA
compensating balance requirement may be an average value, not a set minimum requirement.
Which of these are carrying costs? - AnswersRenting a a warehouse for inventory storage
Paying for inventory insurance.
What does the formulas (2 TFi)1/2 compute - AnswersTe cash replenishment level that minimizes the
annual cash management costs
Which of these apply to a compromise financing policy as compared to either a restrictive or a flexible
policy? - AnswersLess investment in marketable securities than with a flexible policy
Less short-term financing than with a restrictive policy.
What is the cash cycle? - AnswersThe time between a firm paying for raw materials and collecting
payment from the sale of the product made from those materials
