Financial Management
Using a lockbox system to improve collections:
is more expensive than the use of collection centers
utilizes local banks to clear local payments made to the collection center
provides more float than collection centers
results in checks being forward to a P.O. box and clearing through local banks
results in checks being forward to a P.O. box and clearing through local banks
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Which of the following properly lists balance sheet items in order of liquidity, from most liquid to least liquid?A. Accounts receivable, inventory, marketable securities, cash.
B. Cash, marketable securities, accounts receivable, inventory.
C. Inventory, marketable securities, cash, accounts receivable.
D. Cash, inventory, accounts receivable, marketable securities.
If interest or compounding is done on other than an annual basis, adjust by:
A. dividing the number of years by the number of compounding periods
B. multiplying the number of years by the number of compounding periods
C. dividing the interest rate by the number of compounding period
D. multiplying the years and dividing the interest rate by the number of compounding periods
Amortization is considered a source of funds to the firm because:
A. it is purely an accounting entry and doesn’t involve a direct disbursement of funds, freeing up these funds for other investments
B. it represents a reduction in asset holdings
C. it represents an increase in an asset account
D. amortization is not a source of funds
Annuity payments are generally assumed to occur:
A. during the period
B. at the beginning of the period
C. at the end of the period
D. it doesn’t matter when they occur
Profitability ratios measure:
A. the speed at which the firm is turning over its assets
B. the ability of the firm to earn an adequate return on sales, total assets, and invested capital
C. the firm’s ability to pay off short term obligations as they are due
D. the debt position of the firm in light of its assets and earning power
Receivables turnover is:
A. a profitability ratio
B. a debt utilization ratio
C. an asset utilization ratio
D. a liquidity ratio
Financial ratios are used to:
A. weigh and evaluate the operating performance of the firm
B. provide an absolute benchmark of industry performance
C. determine which firm will provide the highest return to investors
D. None of the above are correct
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