1.One way to reduce a firm's cash conversion cycle would be to have as many customers as possible pay using credit rather than cash.

Select one:

a. True

b. False

2.The production cycle ________.

a. is the period from the start of cash outflow for producing a product or service until the associated cash inflow materializes from the sale of that product or service

b. starts when the customer takes delivery of the product and ends when the firm receives payment for the product

c. starts when production begins and ends with the collection of cash from the sale of the product

d. begins at the time a firm first starts to make a product and lasts until the time the customer buys the product

3.A short-term creditor would be most interested in the

a. account collection period

b. times interest earned

c. current ratio

d. net profit margin

4.Accounts receivable variables under the control of the financial manager include level of credit sales, terms of credit sales and quality of credit customers.

a. False

b. True

5.Accounts receivable variables under the control of the financial manager include level of credit sales, terms of credit sales and quality of credit customers.

a. False

b. True

6.When deciding whether or not to take a trade discount, the cost of borrowing from a bank or other source should be compared to the cost of trade credit to determine if the cash discount should be taken.

a. True

b. False

7.The ________ is the period from the start of cash outflow for producing a product or service until the associated cash inflow materializes from the sale of that product or service.

a. accounts receivable cycle

b. cash conversion cycle

c. business operating cycle

d. current ratio