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Chapter 14 How does the seasonal nature of a firm's sales influence its decision regarding the amount of short-term credit to use in its financial
Chapter 14
- How does the seasonal nature of a firm's sales influence its decision regarding the amount of short-term credit to use in its financial structure.
- If long-term credit exposes a borrower to less risk, why would people or firms ever borrow on a short-term basis?
- On average, which group of borrowers would have to pay a higher effective rate for its short-term loans, those who are required to put up collateral or those who are not? Explain.
- What type of inventory make "good" collateral?
Chapter 15
- What are the principle reasons for holding cash? What is a cash budget? For what purposes should cash budgets be created?
- In general, does a firm wish to speed up or slow down collections of payments made by its customers? How does the same firm wish to manage its disbursement? Why?
- Firm A's management is very conservative, whereas Firm B's is more aggressive. Is it true that, other things the same, Firm B would probably have larger holdings of marketable securities? Explain.
- Describe the three classifications of inventory and indicate the purpose for holding each type.
Chapter 16
- What data are necessary to construct an operation breakeven chart? What data are necessary to construct a financial breakeven chart?
- What benefits can be derived from breakeven analysis, both operating and financial? What are some problems with breakeven analysis?
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