Finance post midterm

In managing cash and marketable securities, what should be the manager’s primary concern? Liquidity and safety
“Float” takes place because a lag exists between writing a check and clearing it through the banking system.
The problem in stretching out the maturity of marketable securities is that there is greater possibility of loss.
Which of the following securities represents an unsecured promissory note issued by a corporation? c. Commercial paper
Money market funds are accounts that allow small investors to participate in buying large-denomination securities.
The three primary policy variables to consider when extending credit include all of the following except b. the level of inflation.
Dun & Bradstreet is known for providing credit scoring reports that rank a company’s payment habits relative to its peer group.
Inventory is usually divided into three basic categories except a. projected sales.
Which of the following is generally considered to be the least liquid of current assets? b. Inventory
Use of the economic order quantity a. determines the reorder point.b. provides the lowest overall inventory costs.c. determines the safety stock.d. All of the options!!!!
A Just-In-Time (JIT) inventory management program has all but which of the following requirements? b. Large safety stocks
If average daily remittances are $6 million, and “extended disbursement float” adds two days to the disbursement schedule, how much should the firm be willing to pay for a cash management system if the firm earns 7% on excess funds? D. $840,000 Annual return from cash management system = $6,000,000 x 2 days x 7% = $840,000
Price Corp. is considering selling to a group of new customers and creating new annual sales of $90,000. Five percent will be uncollectible. The collection cost on these accounts is 3% of new sales, the cost of producing and selling is 80% of sales, and the firm is in the 30% tax bracket. What is the profit on new sales? A. $7,560
Massa Machine Tool expects total sales of $60,000. The price per unit is $10. The firm estimates an ordering cost of $25 per order, with an inventory cost of $0.70 per unit. What is the optimum order size? B. 655 units
If a company can implement cash management systems and save three days by reducing remittance time and one day by increasing disbursement time based on $2,000,000 in average daily remittances and $2,500,000 in average daily disbursements and their return on freed-up funds is 10%, what is the maximum that they should spend on the system? C. $850,000 Additional collections ( $2,000,000 x 3 days) = $6,000,000Delayed disbursements ($2,500,000 x 1 day) = 2,500,000Freed-up funds 8,500,000Interest rate x .10Interest on freed-up funds $850,000
We expect that we can receive annual incremental income after taxes of $25,000, including an adjustment for uncollectible accounts. What is the maximum commitment to A/R that we should be willing to assume if our firm’s minimum required after-tax return is 8%? B. $312,500
The inventory decision model provides which type of information? C. optimal order size
Warren Enterprises expects 20,000 unit sales, has ordering costs of $20 per order, carrying costs of $1.00 per unit, and desires to keep 100 units in safety stock. Assuming level production, what should be their average inventory? d. 501-600
Novelty Gifts Inc. is experiencing some inventory control problems. The manager, Wanda LaRue, currently orders 10,000 units four times a year to handle the annual demand of 40,000 units. Each order costs $15 to process and each unit costs $1.50 to carry in inventory. Ms. LaRue maintains a safety stock of 200 units. What is their current total annual inventory cost? Show your answer in this format: X,XXX do not include decimals or dollar signs. When calculating units or number of orders per year if you get a fraction always round up to the next whole unit.

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