Part 7

User
Brooke B Hewitt
Course
BA 520: Financial Strat/Tech(68796-W15)
Test
Part 7 Quiz
Started
1/14/15 2:51 PM
Submitted
1/14/15 6:02 PM
Status
Completed
Attempt Score
75 out of 75 points
Time Elapsed
3 hours, 11 minutes.
Instructions

Question 1
3 out of 3 points

Net operating working capital is defined as operating current assets minus operating current liabilities..

Correct Answer: True

Question 2
3 out of 3 points

Determining a firm's optimal investment in working capital and deciding how that investment should be financed are critical to working capital management.

Correct Answer: True

Question 3
3 out of 3 points

An increase in any current asset must be accompanied by an equal increase in some current liability.

Correct Answer: False

Question 4
3 out of 3 points

If a firm takes actions that reduce its days sales outstanding (DSO), then, other things held constant, this will lengthen its cash conversion cycle (CCC).

Correct Answer: False

Question 5
3 out of 3 points

Other things held constant, if a firm "stretches" (i.e., delays paying) its accounts payable, this will lengthen its cash conversion cycle (CCC).

Correct Answer: False

Question 6
3 out of 3 points

Setting up a lockbox arrangement is one way for a firm to speed up the collection of payments from its customers.

Correct Answer: True

Question 7
3 out of 3 points

The overriding goal of inventory management is to ensure that the firm never suffers a stock-out, i.e., never runs out of an inventory item.

Correct Answer: False

Question 8
3 out of 3 points

The average accounts receivable balance is a function of both the volume of credit sales and the days sales outstanding.

Correct Answer: True

Question 9
3 out of 3 points

Changes in a firm's collection policy can affect sales, working capital, and profits.

Correct Answer: True

Question 10
3 out of 3 points

Suppose a firm changes its credit policy