Fundamentals of Corporate Finance Study Set 23

Business

Quiz 20 :

Financial Risk Management

Quiz 20 :

Financial Risk Management

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What is the primary purpose of credit analysis?
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E

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Jillian was recently hired by a major retail store.Her job is to determine the probability that individual customers will fail to pay for their charge sales.Jillian's job best relates to which one of the following?
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B

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Town Hardware sells goods on credit with payment due 30 days after purchase.If payment is not received by the 30th day, the store mails a friendly reminder to the customer.If payment is not received by the 45th day, the store calls the customer and requests payment and also stops offering credit to that customer.These procedures are referred to as the store's:
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C

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You have recently been hired as an accounting intern for Jefferson Mills.The job that you have been assigned for today is to compile a spreadsheet that has six columns.The column headings are: Invoice #; Customer name; < 30 days; 31-60 days; 61-90 days; > 90 days.You are to list every unpaid invoice by customer name with the amount owed entered into the appropriate column for the number of days between the sale date and today.Once you have completed that, you are to sort the report by customer name and then total the amounts listed in each column.What is this report called?
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Assume that RSF is a wholly-owned subsidiary of the Rolled Steel Company.RSF provides credit financing solely for large ticket items purchased from the Rolled Steel Company.Which one of the following terms describes RSF?
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Scott purchased a shovel, a rake, and a wheelbarrow from The Local Hardware Store yesterday.Today, the store issued a bill for these items and mailed it to Scott.What is the name given to this bill?
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A firm's total investment in receivables depends primarily on the firm's:
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The period of time that extends from the day a credit sale is made until the day the bank credits a firm's account with the payment for that sale is known as the _____ period.
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Blackwell Brothers sells men's suits.The store offers a 1 percent discount if payment is received within 10 days.Otherwise, payment is due within 30 days.This credit offering is referred to as the:
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The terms of sale generally include which of the following? I.type of credit instrument II.cash discount III.credit period IV.discount period
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Allison has developed a set of procedures for determining the amount of each raw material that she needs to have in inventory if she is to keep her firm's assembly lines operating efficiently.These procedures are commonly referred to by which one of the following terms?
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Bill is in charge of the inventory for Home Builder's Supply.As an inventory item gets low, he is to restock the item by a quantity that minimizes the total inventory costs for that item.What is this restocking quantity called?
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Any written proof that a customer owes you money for goods or services provided is referred to as a(n):
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The basic factors to be evaluated in the credit evaluation process, the five Cs of credit, are:
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Phil's Print Shop grants its customers the right to pay for their print jobs within 30 days of the date of service.This 30-day period is referred to as the:
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Geoff Industries offers its credit customers a 2 percent discount if they pay within 10 days.This discount is referred to as a:
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Which one of the following is a system for managing demand-dependent inventories that minimizes the inventory levels of a firm?
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Roger's Home Appliances offers credit to customers it deems worthy of this privilege.To determine if a customer is worthy, the firm computes a numerical value which is used to estimate the probability that the customer will default if credit is granted to them.The process of computing this numerical value is referred to as:
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Which one of the following will increase a firm's investment in accounts receivables?
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You are viewing a graph which compares costs with the amount of credit extended.Both the carrying costs and the opportunity costs of credit are depicted.What is the function called that represents the summation of these carrying and opportunity costs?
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