Homework Answers
Correct statement is A firm's cash cycle generally decreases when a firm switches from a cash to a credit policy, all else equal. Most customers will forgo the discount and pay at the end of the credit period. Total revenues generally decrease if both the quantity sold and the price per unit increase when credit is granted.
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22. Which one of these statements is correct? A) A firm's cash cycle generally decreases when...
22. Which one of these statements is correct? A) A firm's cash cycle generally decreases when...
22. Which one of these statements is correct? A) A firm's cash cycle generally decreases when it switches from a cash to a credit policy, all else equal.. (B) A 2/15, net 30 credit policy tends to decrease the seller's receivables as compared to a straight net 30 policy C) When credit is granted, total revenues generally decrease if both the quantity sold and the price per unit increase D) Only the probability of default should be considered before granting...
9. Which one of these statements is correct? A) A firm's cash cycle generally decreases when...
9. Which one of these statements is correct? A) A firm's cash cycle generally decreases when it switches from a cash to a credit policy, all else equal. B) A firm may have to increase its long-term borrowing if it decides to grant credit to its customers. C) Most customers will forgo the discount and pay at the end of the credit period. D) Only the cost of default should be considered before granting credit. E) Total revenues generally decrease...
9. Which one of these statements is correct? A) Total revenues generally decrease if both the...
9. Which one of these statements is correct? A) Total revenues generally decrease if both the quantity sold and the price per unit increase when credit is granted. B) A firm's cash cycle generally decreases when it switches from a cash to a credit policy, all else equal. C) A firm may have to increase its long-term borrowing if it decides to grant credit to its customers D) Most customers will forgo the discount and pay at the end of...
4. In order to receive the special dividend that the firm announced on July 20, 2020,...
4. In order to receive the special dividend that the firm announced on July 20, 2020, what is the latest date on which you have to purchase the firm’s stock, which is publicly traded in the US markets only? A) End of Day of the Declaration date B) The day before the Ex-dividend date C) End of Day of the Record date D) End of Day of the Ex-dividend date E) The day before the Record date 9. Which one...
Does an increase in a firm's cash cycle necessarily mean that a firm is managing its...
Does an increase in a firm's cash cycle necessarily mean that a firm is managing its cash poorly? (Select all of the choices below that apply.) A. No. An increase in a firm's cash cycle does not necessarily mean that the firm is managing its cash poorly The increase may be due to a conscious management decision. For example, a firm may decide to increase its inventory in order if it has been experiencing excessive stock-outs. All else equal, this...
Which of the following statements is FALSE? OA. The firm's cash cycle is the average length...
Which of the following statements is FALSE? OA. The firm's cash cycle is the average length of time between when a firm originally purchases its inventory and when it receives the cash back from selling its product. O B. If the firm pays cash for its inventory, the firm's operating cycle is identical to the firm's cash cycle O C. The main components of net working capital are cash, inventory, receivables, and payables. O D. Working capital includes the cash...
True or False question The after-tax cost of debt generally increases when a firm's bond rating...
True or False question The after-tax cost of debt generally increases when a firm's bond rating decreases. The weighted average cost of capital for a firm is the discount rate which the firm should apply to all of the projects it undertakes. Assigning discount rates to individual projects based on the risk level of each project may cause the firm's overall weighted average cost of capital to either increase or decrease over time. Other things being equal, the weighted average...
Which of the following statements is CORRECT? a. Relative to sole proprietorships, corporations generally face fewer...
Which of the following statements is CORRECT? a. Relative to sole proprietorships, corporations generally face fewer regulations, and they also find it easier to raise capital. Stockholders should generally be happier than bondholders to have managers invest in risky projects with high potential returns as opposed to safe projects with lower expected returns. There is no good reason to expect a firm's stockholders and bondholders to react differently to the types of assets in which it C. invests. Bondholders should...
5. Cash budget The cash budget is considered the primary forecasting tool when firms try to...
5. Cash budget The cash budget is considered the primary forecasting tool when firms try to estimate their cash flows and figure out if they are likely to need additional cash flows or to generate surplus cash. Consider the case of Mooney Equipment: Mooney Equipment is putting together its cash budget for the following year and has forecasted expected cash collections over the next five quarters (one year plus the first quarter of the next year). The cash collection estimates...
5. Which of the following are items accounts that typically appear on a balance sheet? a....
5. Which of the following are items accounts that typically appear on a balance sheet? a. cost of goods sold, operating expenses, taxes. b. net sales, inventories, notes payable. e. net fixed assets, depreciation expense, advertising expenditures. d. cash, depreciation expense, taxes. e. None of the combinations listed above are correct. 6. Which of the following would directly increase net cash flow from operating activities (assuming all else remains constant)? Note: there is more be more than one answer for...
22. Which one of these statements is correct? A) A firm's cash cycle generally decreases when it switches from a cash to a credit policy, all else equal.. (B) A 2/15, net 30 credit policy tends to decrease the seller's receivables as compared to a straight net 30 policy C) When credit is granted, total revenues generally decrease if both the quantity sold and the price per unit increase D) Only the probability of default should be considered before granting...
9. Which one of these statements is correct? A) A firm's cash cycle generally decreases when it switches from a cash to a credit policy, all else equal. B) A firm may have to increase its long-term borrowing if it decides to grant credit to its customers. C) Most customers will forgo the discount and pay at the end of the credit period. D) Only the cost of default should be considered before granting credit. E) Total revenues generally decrease...
9. Which one of these statements is correct? A) Total revenues generally decrease if both the quantity sold and the price per unit increase when credit is granted. B) A firm's cash cycle generally decreases when it switches from a cash to a credit policy, all else equal. C) A firm may have to increase its long-term borrowing if it decides to grant credit to its customers D) Most customers will forgo the discount and pay at the end of...
Does an increase in a firm's cash cycle necessarily mean that a firm is managing its cash poorly? (Select all of the choices below that apply.) A. No. An increase in a firm's cash cycle does not necessarily mean that the firm is managing its cash poorly The increase may be due to a conscious management decision. For example, a firm may decide to increase its inventory in order if it has been experiencing excessive stock-outs. All else equal, this...
Which of the following statements is FALSE? OA. The firm's cash cycle is the average length of time between when a firm originally purchases its inventory and when it receives the cash back from selling its product. O B. If the firm pays cash for its inventory, the firm's operating cycle is identical to the firm's cash cycle O C. The main components of net working capital are cash, inventory, receivables, and payables. O D. Working capital includes the cash...
Which of the following statements is CORRECT? a. Relative to sole proprietorships, corporations generally face fewer regulations, and they also find it easier to raise capital. Stockholders should generally be happier than bondholders to have managers invest in risky projects with high potential returns as opposed to safe projects with lower expected returns. There is no good reason to expect a firm's stockholders and bondholders to react differently to the types of assets in which it C. invests. Bondholders should...
5. Which of the following are items accounts that typically appear on a balance sheet? a. cost of goods sold, operating expenses, taxes. b. net sales, inventories, notes payable. e. net fixed assets, depreciation expense, advertising expenditures. d. cash, depreciation expense, taxes. e. None of the combinations listed above are correct. 6. Which of the following would directly increase net cash flow from operating activities (assuming all else remains constant)? Note: there is more be more than one answer for...
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