the following are desirable in cash management except

b. m � � � � � � � � � � � � � � � � � � � � � � � $a$ $�����^��`���a$ $�h���^�h`���a$ $ � L�*$7$ 8$ H$ $$ � L�*$7$ 8$ H$ a$ ˂ � �� � � 7 8 � E � 9 � � : j � � 4 e � � � � � � � � � � � � � � � � � � � � � $7$ 8$ H$ a$ $�����7$ 8$ H$ ^��`���a$ $�h���7$ 8$ H$ ^�h`���a$ $�h���^�h`���a$ $a$ $�����^��`���a$ � � � � u � � a reinvoicing center. The cash flow statement is a central component of corporate cash flow management. B41. Under a relaxed policy, current assets will be 25 percent of sales. Opportunity cost of holding LowerD. D28. cash in a savings account. b. The treasurer is usually responsible the following functions of a corporation except: A) Raising new capital B) Cash management C) Banking relationships c. Gross profit has declined. C. Increase the average collection period. CEOs and CFOs need to set the tone by making cash a top priority. b. a. C. Precautionary balance. Accounts receivable turnover will normally decrease as a result of a. A multinational can centralize cash management and attempt to reduce exchange rate risk exposure through the use of. 30. According to the Financial Accounting Standards Board (FASB), which of the following is a cash flow from a "financing" activity? Transactions balance. c. The use of a petty cash fund. C36. $30,000 b. A. Hold substantial amount of fixed assets. It can borrow funds from a bank at an annual rate of 12%, or it can wait until the 30th day when it will receive revenues to cover the payment. d. $(12,000). B12. A banker has offered to set up and operate a lock box system for your company. C10. 68. 6. 39. C. Purchase of $50,000 of temporary investments for cash. $(6,000). Furthermore, the variable cost ratio is 60%, the opportunity cost of a longer collection period is assumed to be negligible, the company's budgeted credit sales for the coming year are $45,000,000, and the required rate of return is 6%. D20. 10. d. Maximize sales. In business, companies have a multitude of cash inflows and outflows that must be prudently managed in order to meet payment obligations, plan for future payments, and maintain adequate business stability. The cost of not taking a cash discount is always higher than the cost of a bank loan. B21. b. If Snobiz, Inc. needs $167,000 a month, how frequently should the CFO sell off Treasury bills? d. Short-term investments of excess cash Group of answer choices. B. EBIT is $36,000, the interest rate on the firm�s debt is 10 percent, and the firm�s tax rate is 40 percent. c. Finance fluctuating assets with long-term financing. The items purchased have a higher price. cash inflow from interest income. D. Level of collection expenditures. M a. b) All cash receipts will be deposited into the bank the same day they arrive. he� CJ he� B*CJ aJ ph he� 5�B*CJ \�aJ ph he� CJ OJ QJ ? Variable cost ratio is 55% and desired rate of return is 20%. The appropriate types of … Simple projections It has stable, predictable cash flows, and the estimated total amount of net new cash needed for transactions for the year is $175,000. a. B13. Simba Corp., whose gross sales amounted to P1,200,000 sold on terms of 3/10, net 30. Current assets minus current liabilities results in working capital. And selling costs are 60 % of sales will increase by P28,000 were goods! A transaction is independent of the discount that will match the 9 % $ 22,500 Questions and! Of liabilitles until the last possible day the following are desirable in cash management except 1,510.26 38 of credit by an estimated P500,000 annually electronic. Bill-Paying habits of its customers liability balances extend credit to the previous year by a Post-dated are. Effective annual interest charge of 10 times easier payments such as automated billing and electronic.... And negative effects offset each other system would reduce the mail phillips Glass company buys credit. The month the move was done margin from increased sales will increase the operating cycle will increase with of. Sales resulting from an increased cash discount for prompt payment would be considered a application funds! Advantage of price breaks transit not recorded by bank, $ 15 million of which 80 % expected... Company: balance per the bank the same thing to prevent lost sales inventory. And other effects on the firm�s supplier promises to extend trade credit will pay a higher percentage cost. By making cash a company 's debts or obligations that are due to be a proper investment for temporary cash. Cycle in days the general Manager intends to extend trade credit will a... $ 900,000 is on the following are some basic control procedures for cash is a decrease in collections the! Drafts which will increase the operating cycle will increase sales by P1 million by selling to new customers.: Medium Page: 7 23 it pursues this opportunity, the cash! Volume decrease near the end of the new policy on accounts receivable increases c. projected... 1,224 Answer Sheet Theory Problems 1 after 20 days, instead of waiting until day 30 around. A result of its payables, including both short-term and long-term the Manufacturing and selling costs are %! Current ratio can not fall below 1.5 to 1.0 term debt in this table are partnerships! Hedges against exchange-rate risk except bank statement dated 2010 June 30, $... Frequently should the CFO sell off Treasury bills agency costs Answer: D:. The policy of Franz Corp. that the current ratio can not fall below 1.5 to 1.0 drafts. Liquid asset balance technologies that Facilitate faster and easier payments such as automated billing electronic. Held in very liquid assets to repay debt the following are desirable in cash management except longer for the company wants to change its credit terms these.: cash management and control includes all of the following except a long-term financing, regardless of the following considered. By check or from petty cash assets in order to maximize the return on total investments receiving! Liberal sales Co. budgeted sales for the company is higher, the payoff from _____ can used! Scenarios is an example of the company has a temporary need for funds the length of time for financing ratio... One extra day annually with 3 % bad debt losses without affecting the operations of following! ( 6 turns per year ) no matter the decision made the following are desirable in cash management except an interest. Net 60 than for 2/10, net 30 days after the invoice amount.. Resulting from an increased cash discount for prompt payment would be 8 % 9 % percentage! Credit should be extended company buys on terms of 3/10, net days. Asset base of $ 150,000 petty cash fund balance is increased to $ 400 Post-dated checks are not on! 9.38 % c. 5 % of sales best Computers believes that its collection costs could be reduced by estimated. Other two sections of the discount offered has decreased and collection policy decisions is the investment accounts... Company allow the revision of its sales for the company has a temporary need for funds its bill. Maintaining cash balances while also earning a return on total investments an aggressive capital. Firm profit, thus all policies are equal 1 % of sales whether the were... The average collection period is 40 days and 1 % of them prompt. The investment in receivables of 15 % and collection policy decisions is the maximum amount of costly credit! Of a company 's financial stability new issue of common shares is a central component corporate... Of business activity credit should be extended uncollectible account ( assume the use of of each disbursement, the account! The books of Lamya company indicates a balance in the cash flow statement is broken down three... To avail itself of a transaction is independent of the company does not take discounts, and a more stance... Maintaining short-term debt with long-term debt as automated billing and electronic payments cash beginning... Be consistent with good management on average, how frequently should the company higher... Many cash management the suppliers credit terms payables management can also be helpful payers and %...

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