Question 1

International cash management is more complex than domestic based cash management because of:
A) difficult capital asset management.
B) similarity in banking systems.
C) exchange rate parity.
D) currency risk fluctuations.

Accepted Answer

International cash management involves dealing with multiple currencies and exchange rate fluctuations, which increases the risk of currency-related losses. Domestic cash management, on the other hand, only deals with one currency. This makes international cash management more complex than domestic cash management.

Question 2

All of the following are benefits of just-in-time inventory ordering systems except:
A) reduces warehouse space.
B) saves utility and manpower costs.
C) reduces inventory financing costs.
D) prevents stock-outs.

Accepted Answer

Just-in-time inventory ordering systems are designed to minimize inventory holding costs by ordering goods and materials only when they are required, reducing the need for warehousing, and decreasing inventory financing costs. However, one of the limitations of a just-in-time inventory system is that there is very little buffer inventory held, which increases the risk of running out of stock if supply chain disruptions occur. Therefore, just-in-time inventory management does not prevent stock-outs.

Question 3

Variables important to credit scoring models include:
A) age of credit scoring company.
B) negative private records.
C) facility owned by competitors.
D) age of company in years.

Accepted Answer

The answer of Variables important to credit scoring models include:
A)...

Question 4

Laura's Furniture is considering selling to a group of new customers and creating new annual sales of $80,000.7% will be uncollectible.The collection cost on these accounts is 2% of all sales,the cost of producing and selling is 75% of sales and the firm is in the 31% tax bracket.What is the profit on new sales?
A) $9,936
B) $8,832
C) $12,696
D) $20,000

Accepted Answer

The answer of Laura's Furniture is considering selling to a...

Question 5

D&B is known for providing:
A) interest rate information to cash managers.
B) credit scoring reports that rank a company's payment habits relative to its peer group.
C) cash management systems to corporate treasurers.
D) consumer credit reports to credit card companies.

Accepted Answer

D&B is primarily known for providing credit scoring reports that rank a company's payment habits relative to its peer group. While they may offer other services, such as cash management systems, this is not their primary focus or what they are best known for.

Question 6

Cost savings from JIT inventory management include:
A) lower transaction fees.
B) lower raw material cost.
C) lower productivity.
D) lower inventory financing costs.

Accepted Answer

JIT inventory management allows for lower inventory levels, which in turn reduces the financing costs associated with carrying excess inventory. Lower transaction fees and raw material costs are not necessarily direct benefits of JIT inventory management, and lower productivity is not a benefit at all.

Question 7

Companies that are mostly influenced by seasonal sales have to make a choice between:
A) level production and inventory reduction.
B) seasonal production and a stable workforce.
C) a stable workforce and inventory build up.
D) a stable workforce and a fluctuating workforce.

Accepted Answer

The answer of Companies that are mostly influenced by seasonal...

Question 8

Inventory is usually divided into three basic categories except:
A) projected sales.
B) work in progress.
C) finished goods.
D) raw materials.

Accepted Answer

The three basic categories of inventory are typically raw materials, work in progress, and finished goods. Projected sales is not considered a category of inventory.

Question 9

The most subjective and also significant segment of the 4 C's of credit for giving final approval is:
A) capacity
B) collateral
C) character
D) conditions

Accepted Answer

Character refers to a borrower's reputation, trustworthiness, and reliability. This is the most subjective aspect of credit evaluation, as it is difficult to measure objectively. However, lenders often place a great deal of weight on a borrower's character, as it can be indicative of their overall likelihood to pay back the loan. Collateral and capacity are also important factors in determining creditworthiness, but are more concrete and measurable. Conditions refer to external economic factors and how they may impact the borrower's ability to repay the loan.

Question 10

The three primary policy variables to consider when extending credit include all of the following except:
A) credit standards.
B) the level of interest rates.
C) the terms of trade.
D) collection policy.

Accepted Answer

The answer of The three primary policy variables to consider...

Question 11

Average daily remittances are $5 million,and "extended disbursement float" adds 5 days to the disbursement schedule,how much should the firm be willing to pay for a cash management system if the firm earns 12% on excess funds.
A) $3,000,000
B) $600,000
C) $1,000,000
D) $0

Accepted Answer

The answer of Average daily remittances are $5 million,and "extended...

Question 12

SWIFT's 'smart card technology':
A) increases the likelihood of electronic fraud.
B) adds additional security by sending secret information through mail.
C) disguises the identity of the receiver.
D) automates the process by which banks exchange authentication keys.

Accepted Answer

SWIFT's 'smart card technology' automates the process by which banks exchange authentication keys, providing an additional layer of security. It does not increase the likelihood of electronic fraud, send secret information through mail, or disguise the identity of the receiver.

Question 13

An example of differences in International cash management systems includes:
A) developed countries using cash payments and developing countries using electronic payments.
B) Canadian companies uses cash payments more than United States Companies.
C) the preference of Russian companies to use cash and United States Companies to use electronic payments.
D) transaction costs are ignored when determining what cash management system to use.

Accepted Answer

The example cited in option C highlights the differences in cash management systems between two specific countries and their company preferences. The other options do not accurately describe differences in cash management systems between countries or companies. The statement in option D is also incorrect as transaction costs are an important consideration in choosing a cash management system.

Question 14

LIBOR is:
A) a resource used in production.
B) an interest rate paid on Eurodollar deposits between banks in the London market.
C) an interest rate paid by European firms when they borrow Eurodollar deposits from Canadian banks.
D) the interest rate paid by the British government on its long-term bonds.

Accepted Answer

LIBOR stands for London Interbank Offered Rate and is an interest rate that is used as a benchmark for a wide range of financial instruments, including loans, bonds, and derivatives. It is the interest rate paid on Eurodollar deposits between banks in the London market, making option B the correct choice.

Question 15

The amount of safety stock that a firm carries depends upon:
A) the unpredictability of inventory used.
B) the supply chain costs.
C) the riskiness of the storage facility.
D) the time period necessary to fill inventory orders.

Accepted Answer

The answer of The amount of safety stock that a...

Question 16

Effective cash management requires awareness of:
A) production design.
B) forecasting theory.
C) security personnel.
D) financial forecasting.

Accepted Answer

Effective cash management requires awareness of financial forecasting in order to anticipate and plan for future cash flows and expenses. Production design and security personnel may be important for other aspects of business operations, but they are not directly related to cash management. Forecasting theory may be useful, but financial forecasting is specifically needed for cash management.

Question 17

International cash management systems often consider:
A) the use of the gold standard.
B) the similarity of interest rates across countries.
C) the similarity of transaction costs.
D) the risk involved in currency fluctuations.

Accepted Answer

International cash management systems often consider the risk involved in currency fluctuations, as this can significantly impact the value of cash holdings and investments. Other factors such as interest rates and transaction costs may also be considered, but currency risk is typically the most important consideration. The use of the gold standard is no longer relevant in modern cash management systems.

Question 18

A Just-In-Time (JIT)inventory management program has all but which of the following requirements?
A) Quality production
B) Large safety stocks
C) Close ties between suppliers,manufacturers,and customers
D) Minimizing inventory levels

Accepted Answer

The whole point of a JIT inventory management program is to minimize inventory levels, so having large safety stocks would not fit with this approach. The other requirements listed (quality production and close ties between supply chain partners) are generally considered necessary for a successful JIT program.

Question 19

When developing a credit scoring report,many variables would be considered.Which of the following best represent the major factors D&B would examine?
A) the age of the management team,the dollar amount of sales,net profits,and long-term debt
B) the age of the company,the number of employees,the level of current assets
C) the financial statements,satisfactory or slow payment experiences,negative public records (suits,liens,judgments,bankruptcies)
D) the company's cash balances,return on equity,and its average tax rates

Accepted Answer

The factors mentioned in option C are the most relevant when developing a credit scoring report. The financial statements provide an overview of the company's financial health, payment experiences indicate their ability to pay back loans, and negative public records can significantly impact their creditworthiness. The other options mentioned in A, B, and D are important factors but not as critical as those mentioned in C.

Question 20

The Bank Rate is set based on:
A) the target rate for overnight money.
B) the yield on 98-day Treasury bills.
C) the prime rate.
D) U.S.fed funds rate.

Accepted Answer

The answer of The Bank Rate is set based on:
A)...

Quiz 7: Current Asset Management

International cash management is more complex than domestic based cash management because of:

All of the following are benefits of just-in-time inventory ordering systems except:

Variables important to credit scoring models include:

D&B is known for providing:

Cost savings from JIT inventory management include:

Companies that are mostly influenced by seasonal sales have to make a choice between:

Inventory is usually divided into three basic categories except:

The most subjective and also significant segment of the 4 C's of credit for giving final approval is:

The three primary policy variables to consider when extending credit include all of the following except:

Average daily remittances are $5 million,and "extended disbursement float" adds 5 days to the disbursement schedule,how much should the firm be willing to pay for a cash management system if the firm earns 12% on excess funds.

SWIFT's 'smart card technology':

An example of differences in International cash management systems includes:

LIBOR is:

The amount of safety stock that a firm carries depends upon:

Effective cash management requires awareness of:

International cash management systems often consider:

A Just-In-Time (JIT) inventory management program has all but which of the following requirements?

When developing a credit scoring report,many variables would be considered.Which of the following best represent the major factors D&B would examine?

The Bank Rate is set based on: