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| 1 | |
Which of the following is not included in current assets? |
| | A) | Accounts receivable |
| | B) | Accrued wages |
| | C) | Cash |
| | D) | Inventories |
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| 2 | |
The sustainable growth rate is equal to: |
| | A) | The plowback ratio times the return on equity |
| | B) | The return on equity divided by the plowback ratio |
| | C) | The return on assets times the plowback ratio |
| | D) | The plowback ratio times the return on equity times the ratio of equity to assets |
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| 3 | |
The cash budget is the primary short-run financial planning tool. The key reasons a cash budget is created are: |
| | A) | To estimate your investment in assets |
| | B) | To estimate the size and timing of your new cash flows |
| | C) | To prepare for potential financing needs |
| | D) | B and C |
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| 4 | |
A company has forecast sales in the first 3 months of the year as follows (figures in millions): January, $60; February, $80; March, $100. 60% of sales are usually paid for in the month that they take place and 40% in the following month. Receivables at the end of December were $24 million. What are the forecasted collections on accounts receivable in March? |
| | A) | $88 million |
| | B) | $92 million |
| | C) | $100 million |
| | D) | $140 million |
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| 5 | |
Cash inflow in cash budgeting comes mainly from: |
| | A) | Collection on accounts receivable |
| | B) | Short-term debt |
| | C) | Issue of securities |
| | D) | None of the above |
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| 6 | |
You have the following data: Total current assets=$426, Total current liabilities=$203, Long-term debt=$300. Calculate net working capital. |
| | A) | $223 |
| | B) | $426 |
| | C) | $126 |
| | D) | $97 |
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| 7 | |
A 364-day facility that allows a company over the next year to borrow, repay, and re-borrow in an example of |
| | A) | Evergreen credit |
| | B) | Revolving credit |
| | C) | Bridge credit |
| | D) | Trade credit |
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| 8 | |
A cash budget may be prepared on a |
| | A) | Monthly basis |
| | B) | Weekly basis |
| | C) | Daily basis |
| | D) | All of the above |
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| 9 | |
A permanent investment in net working capital is a part of what kind of financial plan? |
| | A) | Long term plan |
| | B) | Short term plan |
| | C) | Cash budgets |
| | D) | All of the above |
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| 10 | |
Gross investment less depreciation is ______________. |
| | A) | Net fixed assets |
| | B) | Goodwill |
| | C) | Net working capital |
| | D) | Net investment |
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| 11 | |
Common sources of short-term financing include: |
| | A) | Stretching payables |
| | B) | Issuing bonds |
| | C) | Reducing inventory |
| | D) | All of the above |
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| 12 | |
Current assets and liabilities collectively are known as |
| | A) | uses of cash flow |
| | B) | net working capital |
| | C) | sources of cash flow |
| | D) | working capital |
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| 13 | |
Which of the following is not an advantage of having a large reservoir of cash? |
| | A) | Avoid high costs of raising funds on short notice |
| | B) | Provides protection for difficult times |
| | C) | Allows for change to be made to operations |
| | D) | All of the above |
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| 14 | |
Last year Simon Inc. reported total assets of $200, equity of $70, net income of $50, dividends of $15 and retained earnings of $35. What is Simon Inc's sustainable growth rate? |
| | A) | 25.0% |
| | B) | 57.1% |
| | C) | 50.0% |
| | D) | 71.4% |
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| 15 | |
Which of the following reduces the risk exposure of banks to a single loan? |
| | A) | Information memo |
| | B) | Line of credit |
| | C) | Syndicate |
| | D) | FDIC |
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