41. Money deposited by a borrower with the bank in a low or non-interest-bearing account as a condition of a loan agreement is called a: A. compensating balance. B. secured credit deposit. C. letter of credit. D. line of credit. E. pledge. 42. Brustle's Pottery either factors or assigns all of its receivables to other firms. This is known as: A. accounts receivable financing. B. pledged financing. C. capital funding. D. daily funding. E. capital financing. 43. Which one of the following increases cash? A. granting credit to a customer B. purchasing new machinery C. making a payment on a bank loan D. purchasing inventory E. accepting credit from a supplier 44. Which one of the following will increase net working capital? Assume the current ratio is greater than 1.0. A. paying a supplier for a previous purchase B. paying off a long-term debt C. selling inventory at cost D. purchasing inventory on credit E. selling inventory at a profit on credit 45. Which one of the following will decrease the operating cycle? A. decreasing the inventory turnover rate B. decreasing the accounts payable period C. increasing the accounts receivable turnover rate D. increasing the accounts payable period E. increasing the accounts receivable period 46. Which of the following will increase the cash cycle, all else constant? I. increasing the inventory period II. decreasing the accounts receivable turnover rate III. increasing the accounts payable period IV. decreasing the accounts receivable period A. I and II only B. III and IV only C. I and IV only D. I, II, and III only E. I, III, and IV only 47. The Bear Rug has sales of $811,000. The cost of goods sold is equal to 63 percent of sales. The beginning accounts receivable balance is $41,000 and the ending accounts receivable balance is $38,000. How long on average does it take the firm to collect its receivables? A. 17.26 days B. 17.78 days C. 18.58 days D. 20.44 days E. 29.77 days 48. How does the net present value (NPV) decision rule relate to the primary goal of financial management, which is creating wealth for shareholders? 49. List and briefly describe the three general areas of responsibility for a financial manager. 50. You want to deposit sufficient money today into a savings account so that you will have $1,000 in the account three years from today. Explain why you could deposit less money today if you could earn 3.5 percent interest rather than 3 percent interest