Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

problem1: Which of the following statements is most correct?

[A] A firm with excess production capacity and relatively low variable price would not be inclined to extend more liberal credit terms to its customers than a firm with similar costs that is operating close to capacity.

[B] Firms use seasonal dating primarily to decrease their DSO.

[C] If credit sales as a % of a firm’s total sales increases & the volume of credit sales also raise, then the firm’s accounts receivable will automatically increase.

[D] It is possible for a firm to overstate profits by offering very lenient credit terms which encourage additional sales to financially “weak” companies. A major disadvantage of such a policy is that it is likely to increase uncollectible accounts.

[E] Seasonal dating with terms 2/15, net 30 days, with April 1 dating, means that if the original sale took place on February 1st, the customer can take the discount up until March 15th, but must pay the net invoice amount by April 1st.

problem2: Find which of the following statements is incorrect about working capital policy?

[A] The cash budget is useful in determining future financing needs.

[B] Holding minimal levels of inventory can reduce inventory carrying costs and cannot lead to any adverse effects on profitability.

[C] A company may hold a relatively large amount of cash if it anticipates uncertain sales levels in the coming year.

[D] Credit policy has an impact on working capital since it has the potential to influence sales levels and the speed with which cash is collected.

[E] Managing working capital levels is important to the financial staff since it influences financing decisions and overall profitability of the company

problem3:  Determine which of the following statements is most correct?

[A] If the required compensating balance is larger than the transactions balance the firm would ordinarily hold, then the effective cost of any loan requiring such a balance is increased.

[B] Compensating balance requirements apply only to businesses, not to individuals.

[C] Compensating balances are essentially costless to most firms, because those firms would normally have such funds on hand to meet transactions needs anyway.

[D] Banks are prohibited from earning interest on the funds they force businesses to keep as compensating balances.

[E] All of the statements above are false.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M920004

Have any Question? 


Related Questions in Basic Finance

1 you purchase a condo in new albany ohio for 250000 make

1. You purchase a condo in New Albany, Ohio for $250,000, make a down payment of $20,000, and finance the balance over 20 years with monthly payments and APR of 6.65% (compounded monthly), how much interest will you pay ...

Money and the prices in the long run and open

Money and the Prices in the Long Run and Open Economies Please no plagiarism. I have attached the paper from last week. The company was TORO. The organization's strategic plan you wrote about in Week 2 calls for an aggre ...

The wc pruett corp has 300000 of interest-bearing debt

The W.C. Pruett Corp. has $300,000 of interest-bearing debt outstanding, and it pays an annual interest rate of 11%. In addition, it has $600,000 of common stock on its balance sheet. It finances with only debt and commo ...

Fed policy focused on long-term interest rates why might

Fed Policy Focused on Long-term Interest Rates: Why might the Fed want to focus its efforts on reducing long-term interest rates rather than shortterm interest rates during a weak economy? Explain how it might use a mone ...

Assignmentpublic budget cycledevelop a four- to five-page

Assignment Public Budget Cycle Develop a four- to five-page paper in which you analyze the Public Budget Cycle in a government agency of your choice. Be sure to include each of the phases of the budget cycle (preparation ...

What situation would you use preferred and convertible

What situation would you use preferred and convertible instruments as investments in? Why?

Cross-border mergers are a useful means of overseas

Cross-border mergers are a useful means of overseas expansion for multinational enterprises (MNEs). What are cross-border mergers? What are the circumstances under which MNEs internationalise using cross-border mergers? ...

Stimulative monetary policy during a credit crunch explain

Stimulative Monetary Policy during a Credit Crunch : Explain why a stimulative monetary policy might not be effective during a weak economy in which there is a credit crunch.

Questionhypothesis testing for two populationscaption labor

Question: Hypothesis Testing for Two Populations Caption : Labor negotiations have reared their ugly head again! TNH Industry Human Resources department is concerned about the perception of the hours worked per week at t ...

Why is the npv method for budgeting accepted as the most

Why is the NPV method for budgeting accepted as the most valuable budgeting tool? If you were not allowed to use NPV for a budget you were developing, what other method(s) would you use? Explain your choices.

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate