Question 1

The length of time between the sale of inventory and the collection of the payment for that sale is called the:

Accepted Answer

A)  operating cycle.
B)  inventory period.
C)  accounts receivable period.
D)  accounts payable period.
E)  cash cyclE.F) A) and D)
G) A) and C)

Question 2

Which one of the following statements is correct?

Accepted Answer

A)  The assignment of receivables involves selling the firm's accounts receivables at full price.
B)  Lines of credit frequently require a cleanup period.
C)  With maturity factoring, the borrower receives the loan amount immediately.
D)  Commercial paper is short-term financing offered to highly-rated corporations by major banks.
E)  Credit card receivables funding is a relatively inexpensive method of borrowing on a short-term basis.F) A) and B)
G) All of the above

Question 3

Shortage costs include which of the following?
I.disruption of production schedules
II.inventory ordering costs
III.lost customer goodwill
IV.brokerage costs

Accepted Answer

A)  I and II only
B)  II and III only
C)  II, III, and IV only
D)  I, II, and III only
E)  I, II, III, and IVF) A) and B)
G) A) and E)

Question 4

Assume each month has 30 days and a firm has a 60-day accounts receivable period.During the second calendar quarter of the year, that firm will collect payment for the sales it made during which of the following months?

Accepted Answer

A)  October, November, and December
B)  November, December, and January
C)  December, January, and February
D)  January, February, and March
E)  February, March, and AprilF) None of the above
G) B) and E)

Question 5

The primary difference between a line of credit and a revolving credit arrangement is the:

Accepted Answer

A)  type of collateral used to secure the loan.
B)  length of the credit period.
C)  fact that the line of credit is a secured loan and the revolving credit arrangement is unsecured.
D)  fact that the line of credit is an unsecured loan and the revolving credit arrangement is secured.
E)  classification as either a committed or a noncommitted loan.F) A) and C)
G) B) and E)

Question 6

Metal Designs, Inc., historically produced products for inventory.Now, the firm only produces a product when it receives an actual order from a customer.All else equal, this change will:

Accepted Answer

A)  increase the operating cycle.
B)  lengthen the accounts receivable period.
C)  shorten the accounts payable period.
D)  decrease the cash cycle.
E)  decrease the inventory turnover ratE.F) C) and D)
G) B) and C)

Question 7

Juno Industrial Supply has a $150,000 line of credit with a 7.5 percent interest rate.The loan agreement requires a 2 percent compensating balance, which is based on the total amount borrowed, and which will be held in an interest-free account.What is the effective interest rate if the firm borrows $90,000 on the line of credit for one year?

Accepted Answer

A)  5.42 percent
B)  5.50 percent
C)  7.30 percent
D)  7.50 percent
E)  7.65 percentF) A) and B)
G) All of the above

Question 8

You've worked out a line of credit arrangement that allows you to borrow up to $50 million at any time.The interest rate is 0.5 percent per month.In addition, 7 percent of the amount that you borrow must be deposited in a non-interest bearing account.Assume your bank uses compound interest on its line of credit loans.What is the effective annual interest rate on this lending arrangement?

Accepted Answer

A)  6.65 percent
B)  6.72 percent
C)  6.81 percent
D)  6.87 percent
E)  6.94 percentF) B) and D)
G) A) and B)

Question 9

The Blue Star has sales of $387,000, costs of goods sold of $259,000, average accounts receivable of $12,100, and average accounts payable of $12,600.How long does it take for the firm's credit customers to pay for their purchases?

Accepted Answer

A)  7.67 days
B)  9.24 days
C)  11.41 days
D)  11.88 days
E)  13.81 daysF) D) and E)
G) B) and C)

Exam 18: International Corporate Finance

Which one of the following statements is correct?

Correct Answer
verified

The length of time between the sale of inventory and the collection of the payment for that sale is called the:

Correct Answer
verified

Metal Designs, Inc., historically produced products for inventory.Now, the firm only produces a product when it receives an actual order from a customer.All else equal, this change will:

Correct Answer
verified

Shortage costs include which of the following? I.disruption of production schedules II.inventory ordering costs III.lost customer goodwill IV.brokerage costs

Correct Answer
verified

Correct Answer
verified

The primary difference between a line of credit and a revolving credit arrangement is the:

Correct Answer
verified

The Blue Star has sales of $387,000, costs of goods sold of $259,000, average accounts receivable of $12,100, and average accounts payable of $12,600.How long does it take for the firm's credit customers to pay for their purchases?

Correct Answer
verified

Correct Answer
verified

Assume each month has 30 days and a firm has a 60-day accounts receivable period.During the second calendar quarter of the year, that firm will collect payment for the sales it made during which of the following months?

Correct Answer
verified

Exam 18: International Corporate Finance

Which one of the following statements is correct?

Correct AnswerverifiedShow Answer

The length of time between the sale of inventory and the collection of the payment for that sale is called the:

Correct AnswerverifiedShow Answer

Metal Designs, Inc., historically produced products for inventory.Now, the firm only produces a product when it receives an actual order from a customer.All else equal, this change will:

Correct AnswerverifiedShow Answer

Shortage costs include which of the following? I.disruption of production schedules II.inventory ordering costs III.lost customer goodwill IV.brokerage costs

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The primary difference between a line of credit and a revolving credit arrangement is the:

Correct AnswerverifiedShow Answer

The Blue Star has sales of $387,000, costs of goods sold of $259,000, average accounts receivable of $12,100, and average accounts payable of $12,600.How long does it take for the firm's credit customers to pay for their purchases?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume each month has 30 days and a firm has a 60-day accounts receivable period.During the second calendar quarter of the year, that firm will collect payment for the sales it made during which of the following months?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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