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ashworth college BU440 online exam 1 latest 2016 marchPart 1 of 1 – 100.0/ 100.0 PointsQuestion 1 of 205.0/ 5.0 PointsLennon, Inc. is considering a five-year project that has an initial outlay or cost of $80,000. The respective future cash inflows from its project for years 1, 2, 3, 4, and 5 are: $15,000, $25,000, $35,000, $45,000, and $55,000. Lennon uses the internal rate of return method to evaluate projects. What is Lennon’s IRR?A. The IRR is less than 22.50%.B. The IRR is about 24.16%.C. The IRR is about 26.16%.D. The IRR is over 26.50%.Question 2 of 205.0/ 5.0 PointsThe initial outlay or cost is $1,000,000 for a four-year project. The respective future cash inflows for years 1, 2, 3, and 4 are: $500,000, $300,000, $300,000 and $300,000. What is the payback period without discounting cash flows?A. About 2.50 yearsB. About 2.67 yearsC. About 3.67 yearsD. About 4.50 yearsQuestion 3 of 205.0/ 5.0 PointsThe __________ model answers one basic question: How soon will I recover my initial investment?A. Payback PeriodB. IRRC. NPVD. Profitability IndexQuestion 4 of 205.0/ 5.0 PointsWhich of the statements below is true?A. The hurdle rate is the cost of debt needed to fund a project.B. If the IRR exceeds a project’s hurdle rate, the project should be rejected.C. If the IRR clears the hurdle rate, the project is rejected.D. The hurdle rate should be set so that it reflects the proper risk level for the project.Question 5 of 205.0/ 5.0 PointsThe __________ model provides a single measure (return) but must apply risk outside the model, thus allowing for errors in rankings of projects.A. Payback PeriodB. IRRC. Net Present ValueD. Profitability IndexQuestion 6 of 205.0/ 5.0 PointsConsider the following four-year project: The initial after-tax outlay or after-tax cost is $1,000,000. The future after-tax cash inflows for years 1, 2, 3, and 4 are: $400,000, $300,000, $200,000 and $200,000, respectively. What is the payback period without discounting cash flows?A. 2.5 yearsB. 3.0 yearsC. 3.5 yearsD. 4.0 yearsQuestion 7 of 205.0/ 5.0 PointsThe net present value of an investment is:A. the present value of all benefits (cash inflows).B. the present value of all benefits (cash inflows) minus the present value of all costs (cash outflows) of the project.C. the present value of all costs (cash outflows) of the project.D. the present value of all costs (cash outflow) minus the present value of all benefits (cash inflow) of the project.Question 8 of 205.0/ 5.0 Points__________ corrects for most, but not all, of the problems of IRR and gives the solution in terms of a return.A. Profitability IndexB. Discounted Payback PeriodC. Net Present ValueD. MIRRQuestion 9 of 205.0/ 5.0 PointsConsider the following 10-year project. The initial after-tax outlay or after-tax cost is $1,000,000. The future after-tax cash inflows each year for years 1 through 10 are $200,000 per year. What is the payback period without discounting cash flows?A. 10 yearsB. 5 yearsC. 2.5 yearsD. 0.5 yearsQuestion 10 of 205.0/ 5.0 PointsLincoln Industries Inc. is considering a project that has an initial after-tax outlay or after-tax cost of $350,000. The respective future cash inflows from its five-year project for years 1 through 5 are $75,000 each year. Lincoln expects an additional cash flow of $50,000 in the fifth year. The firm uses the net present value method and has a discount rate of 10%. Will Lincoln accept the project?A. Lincoln accepts the project because it has an NPV greater than $5,000.B. Lincoln rejects the project because it has an NPV less than $0.C. Lincoln accepts the project because it has an NPV greater than $18,000.D. There is not enough information to make a decision.Question 11 of 205.0/ 5.0 PointsWhich of the statements below is true of the payback period method?A. It ignores the cash flow after the initial outflow has been recovered.B. It is biased against projects with early term payouts.C. It incorporates time-value-of-money principles.D. It focuses on cash flows after the initial outflow has been recovered.Question 12 of 205.0/ 5.0 PointsThe capital budgeting decision model that utilizes all the discounted cash flow of a project is the __________ model, which is one of the single most important models in finance.A. net present value (NPV)B. internal rate of return (IRR)C. profitability index (PI)D. discounted payback periodQuestion 13 of 205.0/ 5.0 PointsThere are two ways to correct for projects with unequal lives when using the NPV approach. Which of the answers below is one of these ways?A. One way is to find a common life, without the need to extend the projects to the least common multiple of their lives.B. One way is to find the present value factors and then compare them.C. One way is to compare the lengths of the projects and take the project with the shortest life.D. One way is to find a common life by extending the projects to the least common multiple of their lives.Question 14 of 205.0/ 5.0 PointsFlynn, Inc. is considering a four-year project that has an initial outlay or cost of $80,000. The future cash inflows from its project are $40,000, $40,000, $30,000, and $30,000 for years 1, 2, 3, and 4, respectively. Flynn uses the internal rate of return method to evaluate projects. What is the approximate IRR for this project?A. The IRR is less than 12%.B. The IRR is between 12% and 20%.C. The IRR is about 24.55%.D. The IRR is about 28.89%.Question 15 of 205.0/ 5.0 PointsThe IRR is the discount rate that produces a zero NPV or the specific discount rate at which the present value of the cost equals:A. the future value of the present cash outflows.B. the present value of the future benefits or cash inflows.C. the present value of the cash outflow.D. the investment.Question 16 of 205.0/ 5.0 Points__________ is at the heart of corporate finance, because it is concerned with making the best choices about project selection.A. Capital budgetingB. Capital structureC. Payback periodD. Short-term budgetingQuestion 17 of 205.0/ 5.0 PointsThe __________ model determines at what point in time cash outflow is recovered by the corresponding future cash inflow.A. NPVB. BuybackC. Net Present ValueD. Payback PeriodQuestion 18 of 205.0/ 5.0 PointsWhich of the statements below describes the IRR decision criterion?A. The decision criterion is to accept a project if the IRR falls below the desired or required return rate.B. The decision criterion is to reject a project if the IRR exceeds the desired or required return rate.C. The decision criterion is to accept a project if the IRR exceeds the desired or required return rate.D. The decision criterion is to accept a project if the NPV is positive.Question 19 of 205.0/ 5.0 PointsAcme, Inc. is considering a four-year project that has an initial outlay or cost of $100,000. The respective future cash inflows from its project for years 1, 2, 3, and 4 are: $50,000, $40,000, $30,000 and $20,000. Will it accept the project if its payback period is 31 months?A. Yes, because it pays back in 25 months.B. Yes, because it pays back in 28 months.C. No, because it pays back in over 31 months.D. No, because it pays back in over 35 months.Question 20 of 205.0/ 5.0 PointsWhich of the statements below is FALSE?A. The NPV decision criterion is true when all projects are independent and the company has a sufficient source of funds to accept all positive NPV projects.B. Two projects are mutually exclusive if the accepting of one project has no bearing on the accepting or rejecting of the other project.C. Projects are mutually exclusive if picking one project eliminates the ability to pick the other project.D. If a company has constrained capital, then it can only take on a limited number of projects.ashworth college BU440 online exam 2 latest 2016 marchPart 1 of 1 – 100.0/ 100.0 PointsQuestion 1 of 205.0/ 5.0 PointsOperating Cash Flow (OCF) is equal to what?A. EBIT – Depreciation + TaxesB. EBIT + Depreciation – TaxesC. EBIT – Depreciation – TaxesD. EBIT + Depreciation + TaxesQuestion 2 of 205.0/ 5.0 PointsThe current book value of an asset serves as the basis for determining the gain or loss:A. at retention.B. at book val
ue.C. at market value.D. at disposal.Question 3 of 205.0/ 5.0 Points__________ involve(s) a cash flow that never occurs, but we need to add it as a cost or outflow of a new project.A. Cost recovery of divested assetsB. Capital expendituresC. Sunk costsD. Opportunity costsQuestion 4 of 205.0/ 5.0 PointsTo project the appropriate anticipated cash flow for a project, we must put all cash flow knowledge together. This includes __________ of the incremental cash flow.A. both the amount and timingB. the amountC. the timingD. the amount but not the timeQuestion 5 of 205.0/ 5.0 PointsThere are two main reasons why we need to deal with depreciation. Which of the following is one of these reasons?A. The gain but not the loss when a capital asset is disposedB. The loss but not the gain when a capital asset is disposedC. The tax flow implications from the OCFD. The tax rate implications from the OCFQuestion 6 of 205.0/ 5.0 PointsThe advantage of __________ over __________ depreciation is that you can write off more of your capital costs in the earlier years.A. straight-line depreciation; the modified accelerated cost recovery systemB. straight-line depreciation; straight-line deductionsC. MACRS; straight-lineD. MACRS; straight-line deductionsQuestion 7 of 205.0/ 5.0 PointsMost businesses fail because their __________ dries up.A. net working capitalB. cash flowC. liabilitiesD. tax shieldQuestion 8 of 205.0/ 5.0 PointsA financial manager examines concepts such as sunk costs, opportunity costs, and erosion costs to help understand how to estimate the incremental cash flow of a project, which is:A. the extra money the firm pays from taking on more inventory.B. the additional money the firm receives from taking on a new project.C. the prior money the firm receives from taking on a new project.D. the additional money the firm receives from its choice of financing.Question 9 of 205.0/ 5.0 Points__________ costs each year do not reflect cash flow because the actual purchase and installation (outflow of dollars) of the asset have already taken place.A. DepreciationB. SunkC. OpportunityD. Working CapitalQuestion 10 of 205.0/ 5.0 Points__________ cash flow is the increase in cash generated by a new project above the current cash flow without the new project.A. FutureB. CurrentC. DiscountedD. IncrementalQuestion 11 of 205.0/ 5.0 PointsA firm is considering purchasing two assets. Asset L will have a useful life of 20 years and cost $5 million; it will have installation costs of $1 million but no salvage or residual value. Asset S will have a useful life of 8 years and cost $2 million; it will have installation costs of $500,000 and a salvage or residual value of $400,000. Which asset will have a greater annual straight-line depreciation?A. Asset L has $12,500 more in depreciation per year.B. Asset L has $37,500 more in depreciation per year.C. Asset S has $12,500 more in depreciation per year.D. Asset S has $37,500 more in depreciation per year.Question 12 of 205.0/ 5.0 Points__________ are an accounting measure of performance during a specific period of time, while __________ is the actual inflow or outflow of money.A. Profits; cash flowB. Cash flows; profitC. Dividends; cash flowD. Profits; a dividendQuestion 13 of 205.0/ 5.0 Points__________ of a project are those that have already been incurred and cannot be reversed.A. Erosion costsB. Opportunity costsC. Sunk costsD. Working capital costsQuestion 14 of 205.0/ 5.0 PointsThe advantage of straight-line over MACRS depreciation is that you can write off:A. more of your total capital costs.B. your capital costs in fewer years.C. a larger percentage of your capital costs earlier.D. None of the aboveQuestion 15 of 205.0/ 5.0 PointsWhen a depreciable asset is sold, a tax gain or tax loss on disposal is calculated, based on the book value of the asset at the time of disposal. If a __________ has occurred, __________ are incurred.A. gain; tax reductionsB. gain; taxesC. gain; tax creditsD. loss; taxesQuestion 16 of 205.0/ 5.0 PointsA firm is considering purchasing an asset that will have a useful life of 10 years and cost $5 million; it will have installation costs of $500,000 and a salvage or residual value of $500,000. What is the annual straight-line depreciation for this asset?A. $400,000 per yearB. $500,000 per yearC. $600,000 per yearD. $700,000 per yearQuestion 17 of 205.0/ 5.0 PointsThe revenue is $24,000, the cost of goods sold is $12,000, other expenses (from selling and administration) are $6,000, and depreciation is $2,000. What is the EBIT?A. $12,000B. $6,000C. $4,000D. $2,000Question 18 of 205.0/ 5.0 PointsA gain on disposal is recognized when the selling price of the asset is __________ the book value.A. greater thanB. equal toC. less thanD. greater than or equal toQuestion 19 of 205.0/ 5.0 PointsManagers typically look at the initial outlay for the project as its capital expenditure and determine __________ from this capital expenditure.A. interest expensesB. dividendsC. depreciationD. CEO expensesQuestion 20 of 205.0/ 5.0 PointsThe building of the __________ cash flow of a project is the cornerstone of the financial decision models.A. depreciationB. incrementalC. accountingD. taxashworth college BU440 online exam 3 latest 2016 marchPart 1 of 1 – 100.0/ 100.0 PointsQuestion 1 of 205.0/ 5.0 PointsThe __________ is the cost of each financing component multiplied by that component’s percent of the total funding amount.A. NPVB. IRRC. cost of capitalD. cost of debtQuestion 2 of 205.0/ 5.0 PointsThe riskiness of a future cash flow is measured by __________ , and these are all components of the SML.A. the firm’s standard deviation, correlation, and the market risk premiumB. beta, the market risk premium, and the firm’s standard deviationC. the market risk premium, beta, and correlationD. beta, the market risk premium, and the risk-free rateQuestion 3 of 205.0/ 5.0 PointsThe cost of debt could be which of the following?A. The required return on money borrowed as a long-term loan from a bankB. The required return on money borrowed from a venture capitalistC. The yield-to-maturity on money raised by selling bondsD. All of the choices above could be considered the cost of debt.Question 4 of 205.0/ 5.0 PointsAn investment banker’s fees are part of the __________ realized for issuing new debt or equity.A. floatation costsB. opportunity costsC. revenuesD. benefitsQuestion 5 of 205.0/ 5.0 PointsA firm’s capital structure can be determined by examining which parts of the firm’s balance sheet?A. The long-term assetsB. The debt and equityC. The short-term assets and liabilitiesD. None of the above because a firm’s capital structure is best observed on the income statement.Question 6 of 205.0/ 5.0 PointsWhich of the following is the proper way to adjust the cost of debt to estimate the after-tax cost of debt?A. Rd ÷ (1 + Tc)B. Rd ÷ (1 – Tc)C. Rd × (1 – Tc)D. Rd × (1 + Tc)Question 7 of 205.0/ 5.0 PointsThe __________ of an asset or liability is its cost carried on the balance sheet.A. market valueB. book valueC. hybrid valueD. theoretical valueQuestion 8 of 205.0/ 5.0 PointsThe __________ is the return that the bank or bondholder demands on new borrowing.A. IRRB. WACCC. cost of equityD. cost of debtQuestion 9 of 205.0/ 5.0 PointsWhich of the following would be classified as debt lenders for a firm?A. Preferred shareholders, banks, and nonbank lendersB. Nonbank lenders, common shareholders, and commercial banksC. Preferred shareholders, common shareholders, and suppliersD. Suppliers, nonbank lenders, and commercial banksQuestion 10 of 205.0/ 5.0 PointsYour firm has $4,000,000 available for investment in capital projects. Which combination of projects is the best, given this budget constraint?A. A, B, CB. A, B, DC. A, C, DD. B, C, DQuestion 11 of 205.0/ 5.0 PointsWhich of the items below is sometimes termed hybrid equity financing?A. Retained earningsB. Preferred stockC. Callable bondsD. Variable rate bondsQuestion 12 of 205.0/ 5.0 PointsTakelmer Industries has a different WACC for each of three types of projects. Low-risk projects have a WACC of 8%, average-risk projects a WACC of 10%, and high-risk projects a WACC of
12%. Which of the following projects do you recommend the firm accept?A. A, B, C, D, GB. B, C, E, F, GC. A, D, E, F, G,D. A, B, C, D, E, F, GQuestion 13 of 205.0/ 5.0 PointsWhich of the following is NOT considered a part of the firm’s capital structure?A. Long-term debtB. Retained earningsC. InventoryD. Preferred stockQuestion 14 of 205.0/ 5.0 PointsWhich of the following would be classified as equity financing for a firm?A. Preferred shareholders, banks, and nonbank lendersB. Nonbank lenders, common shareholders, and commercial banksC. Preferred shareholders, common shareholders, and retained earningsD. Suppliers, nonbank lenders, and commercial banksQuestion 15 of 205.0/ 5.0 PointsInvestors __________ for estimating the WACC.A. are indifferent between using market and book valueB. prefer book value to market valueC. prefer market value to book valueD. prefer a mix of book and market valueQuestion 16 of 205.0/ 5.0 PointsYour firm has $2,000,000 available for investment in capital projects. Which combination of projects is the best, given this budget constraint?A. B, CB. A, B, CC. A, B, C, DD. A, C, DQuestion 17 of 205.0/ 5.0 PointsPricing preferred stock is most similar to pricing:A. constant growth common stockB. a perpetuityC. a zero-coupon bondD. a three-month Treasury billQuestion 18 of 205.0/ 5.0 PointsThe cost of capital is:A. the cost of debt in a firm that finances with both debt and equity.B. the cost of each financing component multiplied by that component’s percent of the total borrowed.C. another name for the IRR.D. All of the aboveQuestion 19 of 205.0/ 5.0 Points__________ refers to a method of matching a single project of a company to another company with a single business focus in an effort to assign an appropriate level of risk to the project.A. GhostingB. Pure playC. Outside assignmentD. Subjective assignmentQuestion 20 of 205.0/ 5.0 PointsUnder which of the following circumstances is the pure play method of estimating a project’s beta particularly useful?A. The firm is looking to expand its current business operations, doing essentially the same work.B. The firm is looking to expand its current business operations into a brand new area unlike any of its internal projects.C. The firm is looking to expand its current business operations. The work will be essentially the same as current operations but there is no obvious outside provider of the same service or product.D. The pure play method works equally effectively under each and all of the above scenarios.ashworth college BU440 online exam 5 latest 2016 marchPart 1 of 2 – 42.5/ 50.0 PointsQuestion 1 of 402.5/ 2.5 PointsThe amount of sales a company predicts is a function of two types of data. Which of the types below is one of these two types?A. Accounting dataB. Internal dataC. Rationing dataD. Legal dataQuestion 2 of 402.5/ 2.5 PointsFor March, Heavenly Hotel will have cash receipts of $365,000 and cash disbursements of $370,000. If its beginning cash is $4,000 and its reserves are $3,000, what will be its shortfall in cash for the month?A. There is no shortfall in cash, but an excess of cash.B. -$3,000C. -$4,000D. -$5,000Question 3 of 400.0/ 2.5 PointsA company estimates the following expenditures: total shipping costs of $1,100; wages paid to workers of $9,600; overhead costs of $4,300; raw materials of $5,000; and, dividends and interest paid of $2,200. What are the total production costs?A. $22,200B. $21,100C. $20,100D. $20,000Question 4 of 402.5/ 2.5 PointsWhich of the below is a use of cash?A. Credit SalesB. Retirement of debt (paying off loans and bonds)C. Bank loansD. Cash sales of equipment or other assets of the companyQuestion 5 of 402.5/ 2.5 PointsAn aspect of __________ is forecasting operating cash flow and ultimately the profitability of the company in the coming period.A. short-term financial planningB. medium-term financial planningC. long-term financial planningD. short-term financial investingQuestion 6 of 402.5/ 2.5 PointsManagers know that for cash and credit sales completed in one month that all will be recorded as sales revenue in that month, but that the actual cash flow will take place over a longer period of time because of:A. credit sales.B. erosion.C. foreclosure.D. transit time.Question 7 of 402.5/ 2.5 PointsThe amount and timing of sales are usually provided by the __________ department.A. advertising or financeB. accounting or salesC. sales or marketingD. marketing or planningQuestion 8 of 402.5/ 2.5 PointsShort-term decisions are viewed as decisions that have short-term impacts and can be changed or modified at:  A. relatively low costs.B. relatively high costs.C. relatively high time requirements.D. relatively low costs with high time requirements.Question 9 of 402.5/ 2.5 PointsFinancial forecasts are seldom right on the money, so to speak, but they do provide a yardstick by which a company can measure:A. its past adherence to its long-term plan.B. its past deviation from its long-term plan.C. its adherence to or deviation from its short-term plan.D. its current deviation from its future plan.Question 10 of 402.5/ 2.5 PointsThere are a variety of ways to produce pro formas, but they usually rely on two primary inputs. One of these primary inputs is:A. the projected sales for the coming year.B. the projected sales for the past year.C. next year’s financial statements.D. this year’s financial statements.Question 11 of 402.5/ 2.5 PointsNorWest Outdoor Store will have cash receipts of $47,000 in December and cash disbursements of $41,000 for this month. If its beginning cash is $7,000 and its reserves are $4,000, what will its excess be for December?A. There is no excess, but a shortfall.B. $6,000C. $9,000D. $13,000Question 12 of 402.5/ 2.5 PointsThere are two primary tools used to forecast and set in action a company plan. Which of the tools below is one of these?A. Statements of retained earningsB. Profit budgetsC. Income statementsD. Pro forma statementsQuestion 13 of 400.0/ 2.5 PointsIn the daily planning for cash or the cash forecast, we want to hone in on the management of cash as it applies to the __________ of the company.A. short-term borrowing and long-term investingB. long-term borrowing and short-term investingC. short-term borrowing and short-term investingD. long-term borrowing and long-term investingQuestion 14 of 402.5/ 2.5 PointsForecasting entails drawing a financial picture of a company for the:A. year.B. month.C. quarter.D. All of the aboveQuestion 15 of 402.5/ 2.5 Points__________ consists of items such as number of sales personnel in the field and average sales per representative, competitors and alternative products, and production capabilities and schedules, as well as other factors known mainly to the company.A. External dataB. Product dataC. Employee dataD. Internal dataQuestion 16 of 400.0/ 2.5 PointsShort-term financial planning typically uses forecasted:A. earnings.B. income statements.C. working capital statements.D. All of the aboveQuestion 17 of 402.5/ 2.5 PointsWe start the process of building a cash forecast with predicting the cash inflow from future sales. This is called:A. a sales forecast.B. a cash forecast.C. a monetary forecast.D. a revenue forecast.Question 18 of 402.5/ 2.5 PointsThe goal of the daily management of cash is to have sufficient cash on hand to pay the bills without carrying:A. excess debtB. excess sunk costsC. excess depreciationD. excess cashQuestion 19 of 402.5/ 2.5 PointsWhich one of the costs below is NOT a production cost?A. The wages paid to workersB. The raw materials for manufacturing productsC. The dividends paid to shareholdersD. The shipping costs that get the product to the customerQuestion 20 of 402.5/ 2.5 Points__________ consists of items such as the current interest rates, housing starts, gross national product (GNP), disposable income estimates, or other economic indicators.A. Accounting dataB. Internal dataC. External dataD. Financial dataPart 2 of 2 – 42.5/ 50.0 PointsQuestion 21 of 402.5/ 2.5 PointsWhen a company deals only in cash, the cash conversion cycle becomes:A. the collection cycle.B. the payable cycle.C. the production cycle.D. the collection cycle –
the payable cycle.Question 22 of 402.5/ 2.5 PointsWhich of the following is a consideration when a company decides which customers should receive credit?A. The amount of potential business from the customerB. The credit policies of competing firmsC. The results of credit screeningD. All are considerations that the company takes into account.Question 23 of 400.0/ 2.5 PointsLipscomb is set to establish a reorder policy for his remote snack bar located on Vacation Island. He sells 10 cases of soda per day and has a lead time for delivery of one week. Occasionally, bad weather or mechanical difficulty can delay his delivery by up to three days. At what point should Lipscomb reorder (how many cases on hand) if he wants to also compensate for unexpected order delays?A. 30 casesB. 70 casesC. 100 casesD. There is not enough information to answer this question.Question 24 of 402.5/ 2.5 PointsThe company offering a discount on accounts payable is trying to __________, and the firm that pays on time rather than take a discount is attempting to __________.A. speed up cash outflow; slow down cash inflowB. speed up cash inflow; slow down cash inflowC. speed up cash inflow; slow down cash outflowD. speed up cash outflow; slow down cash outflowQuestion 25 of 402.5/ 2.5 PointsUnder __________, companies work with both their suppliers and their customers to reduce the time items are in inventory and the amount of inventory carried by a company.A. ABC inventory managementB. EOQ inventory managementC. federal procurement programsD. JIT inventory managementQuestion 26 of 402.5/ 2.5 PointsThe Hannibal Homers minor league baseball club is considering an expansion of its stadium to increase capacity by 2,000 seats. Management estimates increased revenue from ticket and concession sales to be $600,000 per year for the next 5 years. The cost of expansion is $750,000, with an additional $50,000 in working capital. The working capital increase is permanent (will not be recovered after 5 years). Annual costs are expected to increase by $200,000 per year, the club’s cost of capital is 14%, and its tax rate is 30%. If the stadium addition is depreciated in a straight line to a value of $0.00 over 5 years, what is the IRR of this project? (Ignore any revenues or costs associated with a terminal value of the project after five years.) Use a financial calculator to determine your answer.A. 9.41%B. 14.00%C. 25.33%D. 29.45%Question 27 of 402.5/ 2.5 PointsA __________ inventory item is an item that is not used in current operations but is serving a backup role in case the current item fails during operation.A. Type CB. redundantC. reticentD. beta generationQuestion 28 of 400.0/ 2.5 PointsIn terms of the float, the buyer of a product wants to __________ and the seller wants to __________.A. increase the collection float; decrease the disbursement floatB. decrease the disbursement float; decrease the collection floatC. decrease the collection float; decrease the disbursement floatD. increase the disbursement float; decrease the collection floatQuestion 29 of 402.5/ 2.5 PointsEOQ equals:A.B.C.D.Question 30 of 402.5/ 2.5 Points__________ is the collective term used to describe a firm’s decisions as to how customers will qualify for credit, what payment plan is allowed to creditors, and how overdue bills will be collected.A. Credit historyB. Credit policyC. Collection policyD. Payment policyQuestion 31 of 400.0/ 2.5 PointsAn important objective of cash management is to __________ the disbursement float and __________ the collection float.A. lengthen; reduceB. lengthen; lengthenC. reduce; reduceD. reduce; lengthenQuestion 32 of 402.5/ 2.5 PointsWhich of the following does NOT reduce the length of time of collection float for a firm?A. Direct payment via online checkingB. The firm paying suppliers with a credit cardC. LockboxesD. Electronic fund transfers (ETF)Question 33 of 402.5/ 2.5 PointsExtending credit to a customer has three major components:A. a policy on how customers will qualify for credit, a policy on the payment plan allowed creditors, and a policy for collecting overdue bills.B. a policy on how customers will qualify for credit, a policy on paying commissions on sales, and a policy for collecting overdue bills.C. a policy on how customers will qualify for credit, a policy on the payment plan allowed creditors, and a policy on accounting for depreciation.D. a policy on how customers will qualify for credit, a policy on accounting for depreciation, and a policy on paying commissions on sales.Question 34 of 402.5/ 2.5 PointsEOQ focuses on the tradeoff between:A. carrying costs and delivery costs.B. seasonality and steady production.C. carrying costs and ordering costs.D. fixed and variable costs.Question 35 of 402.5/ 2.5 PointsReady Tees, an online retailer of t-shirts, orders 100,000 t-shirts per year from its manufacturer. The cost of ordering and delivery is $100 per order. If Ready Tees orders 6,667 t-shirts in each order, what are the firm’s total annual ordering costs (rounded to the nearest dollar)?A. $2,000B. $1,500C. $1,000D. $667Question 36 of 402.5/ 2.5 Points__________ is additional inventory kept on hand so that if an order is delayed in arrival the current inventory is sufficient to cover the delay.A. Excess inventoryB. Safety stockC. Stock overageD. Type AQuestion 37 of 402.5/ 2.5 PointsJolly Roger Kite Company has a payment cycle of 17 days, a collection cycle of 31 days, and a production cycle of 12 days. What is the average cash conversion cycle for the Jolly Roger Company?A. 2 daysB. 36 daysC. 26 daysD. 60 daysQuestion 38 of 402.5/ 2.5 PointsEstimating __________ is one part of managing short-term cash needs. The second part is estimating __________.A. cash inflow, accounts payableB. cash inflow, cash outflowC. accounts receivable, cash outflowD. accounts receivable, cash inflowQuestion 39 of 402.5/ 2.5 PointsTotal carrying cost equals:A. the average carry cost per item times the maximum level of inventory.B. the average carry cost per item times the minimum level of inventory.C. the average carry cost per item times the average level of inventory divided by 2.D. the average carry cost per item times the average level of inventory.Question 40 of 402.5/ 2.5 PointsWhich of the following choices lists the least to most aggressive actions in the pursuit of overdue debt?A. 1) a collection agency, 2) court action, 3) a letter requesting overdue paymentB. 1) court action, 2) a collection agency, 3) a letter requesting overdue paymentC. 1) a letter requesting overdue payment, 2) court action, 3) a collection agencyD. 1) a letter requesting overdue payment, 2) a collection agency, 3) court actionashworth college BU440 online exam 7 latest 2016 marchPart 1 of 2 – 50.0/ 50.0 PointsQuestion 1 of 402.5/ 2.5 PointsBecause financial ratios can vary across industries, it is __________ these ratios by industry.A. not necessary to studyB. unimportant to benchmarkC. important to benchmarkD. futile to examineQuestion 2 of 402.5/ 2.5 PointsComparing two companies using __________ may point out differences in management styles.A. common-size financial statementsB. sales growthC. historical share pricesD. earnings per shareQuestion 3 of 402.5/ 2.5 PointsWhich of the statements below is true?A. Inventory turnover is cost of goods sold divided by accounts receivables.B. Receivables turnover is accounts receivable divided by sales.C. Total asset turnover is profits divided by total assets.D. A higher inventory turnover ratio signifies that inventory is moving faster.Question 4 of 402.5/ 2.5 PointsTo convert an income statement into a common-size income statement, we restate all the numbers as percentages of:A. total revenues.B. cost of goods sold.C. net income.D. total assets.Question 5 of 402.5/ 2.5 PointsIncome statements are often prepared:A. monthly for external use and quarterly for internal reporting.B. annually for internal use and quarterly for external reporting.C. monthly for internal use and quarterly for external reporting.D. monthly for internal use and annually for external reporting.Question 6 of 402.5/ 2.5 PointsWhich of the following statements is true about
benchmarking?A. It com