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Exam 6: Working Capital Management

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Question 81

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The maximum cash disbursement period comes from two complementary management practices: liability management and ____________________ management.

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Question 82

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-Interest on money is $ _____________________.

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Question 83

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The cost of managing a warehouse is part of the "ordering costs".

What is the goal of managing working capital?

Match the words with the term. -credit terms

Who usually has responsibility for cash management?

Match the words with the term. -net working capital

____________________ is a concept dealing with the amount of funds tied up in cheques that have been written but are still in process and have NOT yet been collected.

Which of the following is an inventory management tool?

The main objective of ____________________ management is to maintain a reasonable amount of cash so that profitability is NOT affected and payment of short-term commitments is possible.

-Net profit is $ ________________________.

A company can improve its cash conversion efficiency ratio by extending its average collection period.

Calculations related to the existing credit policies. With existing credit terms, revenue is $ 1,000,000. If credit terms were relaxed, revenue would increase by 10 %. Profit before bad debts is estimated at 10 % of revenue. With existing credit terms, bad debts is .5 % of profit before bad debts and with new credit terms, bad debts would increase to 1.0 %. If the new credit terms were applied, trade receivables would increase from $200,000 to $240,000 -Return on investment is ____________________ %.

Match the words with the term. -financing costs

Which of the following is NOT the mission of the credit manager?

-Effective price is $ ________________________ .

By offering 2 | 10, N | 30 credit terms to customers, a company automatically improves its profitability.

Match the words with the term. -trade receivables management

The economic ordering quantity formula takes into consideration factors such as lead time, reorder point and the stock arrival point.

A physical count of inventory provides the basic data necessary to perform an item analysis of the non-current assets.