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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 | | Short-term planning is also called: |
| | A) | Market planning |
| | B) | Accounts receivable projection |
| | C) | Forecasting |
| | D) | Cash budgeting |
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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 these options |
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6 | | You have the following data: Total current assets = $426, total current liabilities = $203, and 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 these options |
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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 these options |
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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 these options |
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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) | Avoiding high costs of raising funds on short notice |
| | B) | Providing protection for difficult times |
| | C) | Allowing for changes to be made to operations |
| | D) | All of these options |
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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 | | The highest growth rate the firm can maintain without increasing financial leverage is called: |
| | A) | Leverage rate |
| | B) | Peak growth rate |
| | C) | Sustainable growth rate |
| | D) | None of these options |
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