Question 1

When actual sales are greater than forecasted sales:

Accepted Answer

A)   inventory will increase.
B)   production schedules might have to be revised downward.
C)   accounts receivable will decrease.
D)   inventory will decrease and accounts receivable will increase.

Question 2

The cash conversion cycle is the time that is taken to collect accounts receivable.

Accepted Answer

A) True 
 B)False

Question 3

A conservatively financed firm would:

Accepted Answer

A)   use long-term financing for all capital assets and short-term financing for all other assets.
B)   finance a portion of permanent assets and short-term assets with short-term debt.
C)   use equity to finance capital assets, long-term debt to finance permanent assets, and short-term debt to finance fluctuating current assets.
D)   use long-term financing for permanent assets and capital assets and a portion of the short-term fluctuating assets and use short-term financing for all other short-term assets.

Question 4

In periods of tight money, long-term rates are often higher than short-term rates.

Accepted Answer

A) True 
 B)False

Exam 6: Working Capital and the Financing Decision

A conservatively financed firm would:

Correct Answer
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When actual sales are greater than forecasted sales:

Correct Answer
verified

In periods of tight money, long-term rates are often higher than short-term rates.

Correct Answer
verified

The cash conversion cycle is the time that is taken to collect accounts receivable.

Correct Answer
verified

Exam 6: Working Capital and the Financing Decision

A conservatively financed firm would:

Correct AnswerverifiedShow Answer

When actual sales are greater than forecasted sales:

Correct AnswerverifiedShow Answer

In periods of tight money, long-term rates are often higher than short-term rates.

Correct AnswerverifiedShow Answer

The cash conversion cycle is the time that is taken to collect accounts receivable.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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