Working Capital Management

What is the term for current assets that a firm must carry even at the lowest point of its cycles?

A firm has an inventory of 250,000 dollars. Its annual cost of goods sold is 1,013,889 dollars. Using a 365-day year, what is the firm's inventory conversion period?

Which financing policy matches the maturities of assets and liabilities, using long-term capital for permanent assets and short-term debt for temporary assets?

A firm is offered trade credit terms of 2/10, net 30. What is the nominal annual cost of this trade credit if the firm forgoes the discount and pays on day 30?

What term describes the financing policy where a firm holds relatively large amounts of cash, marketable securities, and inventories, and has a liberal credit policy?

According to the DuPont equation, what is the direct impact of increasing the total assets turnover ratio, holding other factors constant?

A firm has an inventory conversion period of 60 days, an average collection period of 60 days, and a payables deferral period of 40 days. What is its cash conversion cycle (CCC)?

What is the primary purpose of a cash budget for a firm?

Which of the following is NOT one of the four variables of a firm's credit policy?

What is the largest single category of short-term debt for the average corporation?

A loan that is backed by collateral, such as inventories or accounts receivable, is known as what type of loan?

A firm with an aggressive current assets financing policy would finance some of its permanent assets with what type of debt?

What is the primary risk associated with using a high level of short-term debt to finance assets?

What is the term for post office boxes operated by banks that are used to speed up the effective receipt of cash from customers?

A firm has annual sales of 1,216,666 dollars and accounts receivable of 300,000 dollars. Using a 365-day year, what is its average collection period (or DSO)?

Which term describes the average length of time between the purchase of materials and the payment of cash for them?

What is the difference between free trade credit and costly trade credit?

What type of short-term loan is typically used for automobiles and other consumer installment loans, where interest is calculated on the full principal and added to the loan's face value?

Allied Food Products has a target cash balance of 10 million dollars. For July, it has a beginning cash balance of 10 million dollars and a projected net cash flow of negative 11 million dollars. What will be its required total loan at the end of July to maintain its target balance?

What is the primary advantage of a revolving credit agreement over an informal line of credit?

Which of the following is an unsecured, short-term promissory note issued by a large, strong firm?

What is the primary reason for a firm to adopt a conservative current assets financing policy?

When monitoring accounts receivable, what does a high Days Sales Outstanding (DSO) ratio typically indicate?

What type of funds are generated automatically from a firm's operations as it expands, such as accounts payable and accruals?

Parramore Corp has 12 million dollars in sales and 3.25 million dollars in receivables. What is its cash conversion cycle (CCC) if its inventory conversion period is 121.67 days and its payables deferral period is 50.69 days? Its cost of goods sold is 75 percent of sales.