Is it possible for the cash budget and the pro forma income statement to have different results a yes, because revenues and expenses included in each statement are different b yes, because revenues and expenses are accounted for over different time periods c no, because they contain the same variables, while just using different formats d no, because the cash budget and the pro forma income statement provide forecasts for the same time period Cash budgets do not provide reasonable predictions for asset requirements when the asset purchases are lumpy a True b False For a growing firm, external financing needed will most likely be greater than discretionary financing needed due to increases in accounts payable and accruals a True b False For a growing firm, external financing needed will most likely be greater than discretionary financing needed due to increases in accounts payable and accruals a True b False Which of the following is a limitation of the percent of sales method of preparing pro forma financial statements a A firm's investment in accounts receivable is seldom related to sales volume b Not all assets and liabilities increase or decrease as a constant percent of sales c Inventory levels are seldom affected by changes in sales volume d The dividend payout ratio may change from one year to the next A company decreases the risk of insolvency by financing long term assets with short term debt a True b False Idaho Mining, Inc borrows at prime plus 1 5 on its line of credit The line requires a 15 compensating balance If prime rate is 9 , what is the nominal APR of the line of credit a 9 0 b 6 0 c 10 6 d 12 4 Brown Inc needs to borrow $250,000 for the next 6 months The company has a line of credit with a bank that allows the company to borrow funds with an 8 interest rate subject to a 20 of loan compensating balance Currently, Brown Inc has no funds on deposit with the bank and will need the loan to cover the compensating balance as well as their other financing needs What will be the annual percentage rate, or APR, for this financing a 10 00 b 12 12 c 10 67 d 13 33 A bank is legally obligated to provide credit under a revolving credit agreement, but not under a line of credit a True b False The PMI, Inc processes an estimated 200,000 checks per year from its customers Total revenue collected by check is $40,000,000 The average float time until the funds are credited to PMI's checking account is 6 days For an extra cost of $ 06 check, PMI's bank will install a lock box system that will reduce float time from 6 days to 2 5 days If PMI earns 3 5 on its checking account, how much per check will PMI make if it uses the lock box system a $ 005 b $ 006 c $ 007 d $ 008 The time necessary for a deposited check to clear through the commercial banking system causes which of the following types of floats a mail b processing c transit d disbursing Effective cash management involves the tradeoff between the risk of insolvency (resulting in higher near cash balances) and the desire to earn higher returns (resulting in lower near cash balances) a True b False Assume that liquid funds can be invested to yield 4 5 percent If annual remittance checks total $2 billion, what is it worth for the firm to reduce float by 1 day a $388,349 b $246,575 c $257,534 d $24,658 A large corporation has annual sales revenues of $6 billion The corporation currently earns 2 25 on its money market account If the corporation can reduce its float by three days by making its billing and collection functions more efficient, the company's operating profits will increase by approximately a $3,069,863 b $2,196,500 c $1,350,000 d $1,109,589 The speed of the collections process is determined by three types of float mail float, processing float, and transit float a True b False If you were a treasurer for a Fortune 1,000 corporation who has responsibility for investing excess cash balances, which of the following alternatives would you be least likely to select a commercial paper b common stock c bankers' acceptances d U S Treasury bills Flashbinder Guitars, Inc is considering a lockbox system that will increase its check processing cost by $ 20 per check The company estimates an average check size of $900 and expects any funds freed up by the new lockbox system can be invested in an account that earns 4 per year before taxes What reduction in collection time is necessary for the lockbox to be beneficial to Flashbinder Guitars Inc a 1 96 days b 2 03 days c 1 73 days d 2 15 days Determine the effective annualized cost of forgoing the trade discount on terms 2 15 net 65 a 11 30 b 14 69 c 32 6 d 48 98 A British made component costs 36 U K pounds A company in the United States needs to buy these components and the current indirect quote indicates that one dollar will buy 6250 pounds Ignoring transactions costs, how much will one component cost in U S dollars a $22 50 b $45 94 c $57 60 d $72 00 If you are an importer of goods and you need to make payment for the purchase of inventory before the close of business today, which of the below is the correct term for the exchange rate that you will use a indirect rate b spot rate c direct rate d forward rate 1) Is it possible for the cash budget and the pro forma income statement to have different results a yes, because revenues and expenses included in each statement are different b yes, because revenues and expenses are accounted for over different time periods c no, because they contain the same variables, while just using different formats d no, because the cash budget and the pro forma income statement provide forecasts for the same time period 2) Cash budgets do not provide reasonable predictions for asset requirements when the asset purchases are lumpy a True b False 3) For a growing firm, external financing needed will most likely be greater than discretionary financing needed due to increases in accounts payable and accruals a True b False 4) For a growing firm, external financing needed will most likely be greater than discretionary financing needed due to increases in accounts payable and accruals a True b False 5) Which of the following is a limitation of the percent of sales method of preparing pro forma financial statements a A firm's investment in accounts receivable is seldom related to sales volume b Not all assets and liabilities increase or decrease as a constant percent of sales c Inventory levels are seldom affected by changes in sales volume d The dividend payout ratio may change from one year to the next 6) A company decreases the risk of insolvency by financing long term assets with short term debt a True b False 7) Idaho Mining, Inc borrows at prime plus 1 5 on its line of credit The line requires a 15 compensating balance If prime rate is 9 , what is the nominal APR of the line of credit a 9 0 b 6 0 c 10 6 d 12 4 8) Brown Inc needs to borrow $250,000 for the next 6 months The company has a line of credit with a bank that allows the company to borrow funds with an 8 interest rate subject to a 20 of loan compensating balance Currently, Brown Inc has no funds on deposit with the bank and will need the loan to cover the compensating balance as well as their other financing needs What will be the annual percentage rate, or APR, for this financing a 10 00 b 12 12 c 10 67 d 13 33 9) A bank is legally obligated to provide credit under a revolving credit agreement, but not under a line of credit a True b False 10) The PMI, Inc processes an estimated 200,000 checks per year from its customers Total revenue collected by check is $40,000,000 The average float time until the funds are credited to PMI's checking account is 6 days For an extra cost of $ 06 check, PMI's bank will install a lock box system that will reduce float time from 6 days to 2 5 days If PMI earns 3 5 on its checking account, how much per check will PMI make if it uses the lock box system a $ 005 b $ 006 c $ 007 d $ 008 11) The time necessary for a deposited check to clear through the commercial banking system causes which of the following types of floats a mail b processing c transit d disbursing 12) Effective cash management involves the tradeoff between the risk of insolvency (resulting in higher near cash balances) and the desire to earn higher returns (resulting in lower near cash balances) a True b False 13) Assume that liquid funds can be invested to yield 4 5 percent If annual remittance checks total $2 billion, what is it worth for the firm to reduce float by 1 day a $388,349 b $246,575 c $257,534 d $24,658 14) A large corporation has annual sales revenues of $6 billion The corporation currently earns 2 25 on its money market account If the corporation can reduce its float by three days by making its billing and collection functions more efficient, the company's operating profits will increase by approximately a $3,069,863 b $2,196,500 c $1,350,000 d $1,109,589 15) The speed of the collections process is determined by three types of float mail float, processing float, and transit float a True b False 16) If you were a treasurer for a Fortune 1,000 corporation who has responsibility for investing excess cash balances, which of the following alternatives would you be least likely to select a commercial paper b common stock c bankers' acceptances d U S Treasury bills 17) Flashbinder Guitars, Inc is considering a lockbox system that will increase its check processing cost by $ 20 per check The company estimates an average check size of $900 and expects any funds freed up by the new lockbox system can be invested in an account that earns 4 per year before taxes What reduction in collection time is necessary for the lockbox to be beneficial to Flashbinder Guitars Inc a 1 96 days b 2 03 days c 1 73 days d 2 15 days 18) Determine the effective annualized cost of forgoing the trade discount on terms 2 15 net 65 a 11 30 b 14 69 c 32 6 d 48 98 19) A British made component costs 36 U K pounds A company in the United States needs to buy these components and the current indirect quote indicates that one dollar will buy 6250 pounds Ignoring transactions costs, how much will one component cost in U S dollars a $22 50 b $45 94 c $57 60 d $72 00 20) If you are an importer of goods and you need to make payment for the purchase of inventory before the close of business today, which of the below is the correct term for the exchange rate that you will use a indirect rate b spot rate c direct rate d forward rate

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jun 10, 2024

Is it possible for the cash budget and the pro forma income statement to have different results? a. yes, because revenues and expenses included in

Is it possible for the cash budget and the pro forma income statement to have different results? a. yes, because revenues and expenses included in each statement are different b. yes, because revenues and expenses are accounted for over different time periods c. no, because they contain the same variables, while just using different formats d. no, because the cash budget and the pro forma income statement provide forecasts for the same time period
Cash budgets do not provide reasonable predictions for asset requirements when the asset purchases are lumpy. a. True b. False
For a growing firm, external financing needed will most likely be greater than discretionary financing needed due to increases in accounts payable and accruals. a. True b. False
For a growing firm, external financing needed will most likely be greater than discretionary financing needed due to increases in accounts payable and accruals. a. True b. False
Which of the following is a limitation of the "percent of sales method" of preparing pro forma financial statements? a. A firm's investment in accounts receivable is seldom related to sales volume. b. Not all assets and liabilities increase or decrease as a constant percent of sales. c. Inventory levels are seldom affected by changes in sales volume. d. The dividend payout ratio may change from one year to the next.
A company decreases the risk of insolvency by financing long-term assets with short-term debt. a. True b. False
Idaho Mining, Inc borrows at prime plus 1.5% on its line of credit. The line requires a 15% compensating balance. If prime rate is 9%, what is the nominal APR of the line of credit? a. 9.0% b. 6.0% c. 10.6% d. 12.4%
Brown Inc. needs to borrow $250,000 for the next 6 months. The company has a line of credit with a bank that allows the company to borrow funds with an 8% interest rate subject to a 20% of loan compensating balance. Currently, Brown Inc. has no funds on deposit with the bank and will need the loan to cover the compensating balance as well as their other financing needs. What will be the annual percentage rate, or APR, for this financing? a. 10.00% b. 12.12% c. 10.67% d. 13.33%
A bank is legally obligated to provide credit under a revolving credit agreement, but not under a line of credit. a. True b. False
The PMI, Inc. processes an estimated 200,000 checks per year from its customers. Total revenue collected by check is $40,000,000. The average float time until the funds are credited to PMI's checking account is 6 days. For an extra cost of $ .06/check, PMI's bank will install a lock-box system that will reduce float time from 6 days to 2.5 days. If PMI earns 3.5% on its checking account, how much per check will PMI make if it uses the lock-box system? a. $.005 b. $.006 c. $.007 d. $.008
The time necessary for a deposited check to clear through the commercial banking system causes which of the following types of floats? a. mail b. processing c. transit d. disbursing
Effective cash management involves the tradeoff between the risk of insolvency (resulting in higher near cash balances) and the desire to earn higher returns (resulting in lower near cash balances). a. True b. False
Assume that liquid funds can be invested to yield 4.5 percent. If annual remittance checks total $2 billion, what is it worth for the firm to reduce float by 1 day? a. $388,349 b. $246,575 c. $257,534 d. $24,658
A large corporation has annual sales revenues of $6 billion. The corporation currently earns 2.25% on its money market account. If the corporation can reduce its float by three days by making its billing and collection functions more efficient, the company's operating profits will increase by approximately a. $3,069,863 b. $2,196,500 c. $1,350,000 d. $1,109,589
The speed of the collections process is determined by three types of float: mail float, processing float, and transit float. a. True b. False
If you were a treasurer for a Fortune 1,000 corporation who has responsibility for investing "excess cash balances," which of the following alternatives would you be least likely to select? a. commercial paper b. common stock c. bankers' acceptances d. U.S. Treasury bills
Flashbinder Guitars, Inc. is considering a lockbox system that will increase its check processing cost by $.20 per check. The company estimates an average check size of $900 and expects any funds freed up by the new lockbox system can be invested in an account that earns 4% per year before taxes. What reduction in collection time is necessary for the lockbox to be beneficial to Flashbinder Guitars Inc.? a. 1.96 days b. 2.03 days c. 1.73 days d. 2.15 days
Determine the effective annualized cost of forgoing the trade discount on terms 2/15 net 65. a. 11.30% b. 14.69% c. 32.6% d. 48.98%
A British-made component costs 36 U.K. pounds. A company in the United States needs to buy these components and the current indirect quote indicates that one dollar will buy .6250 pounds. Ignoring transactions costs, how much will one component cost in U.S. dollars? a. $22.50 b. $45.94 c. $57.60 d. $72.00
If you are an importer of goods and you need to make payment for the purchase of inventory before the close of business today, which of the below is the correct term for the exchange rate that you will use? a. indirect rate b. spot rate c. direct rate d. forward rate

1) Is it possible for the cash budget and the pro forma income statement to have different results? a. yes, because revenues and expenses included in each statement are different b. yes, because revenues and expenses are accounted for over different time periods c. no, because they contain the same variables, while just using different formats d. no, because the cash budget and the pro forma income statement provide forecasts for the same time period 2) Cash budgets do not provide reasonable predictions for asset requirements when the asset purchases are lumpy. a. True b. False 3) For a growing firm, external financing needed will most likely be greater than discretionary financing needed due to increases in accounts payable and accruals. a. True b. False 4) For a growing firm, external financing needed will most likely be greater than discretionary financing needed due to increases in accounts payable and accruals. a. True b. False 5) Which of the following is a limitation of the "percent of sales method" of preparing pro forma financial statements? a. A firm's investment in accounts receivable is seldom related to sales volume. b. Not all assets and liabilities increase or decrease as a constant percent of sales. c. Inventory levels are seldom affected by changes in sales volume. d. The dividend payout ratio may change from one year to the next. 6) A company decreases the risk of insolvency by financing long-term assets with short-term debt. a. True b. False 7) Idaho Mining, Inc borrows at prime plus 1.5% on its line of credit. The line requires a 15% compensating balance. If prime rate is 9%, what is the nominal APR of the line of credit? a. 9.0% b. 6.0% c. 10.6% d. 12.4% 8) Brown Inc. needs to borrow $250,000 for the next 6 months. The company has a line of credit with a bank that allows the company to borrow funds with an 8% interest rate subject to a 20% of loan compensating balance. Currently, Brown Inc. has no funds on deposit with the bank and will need the loan to cover the compensating balance as well as their other financing needs. What will be the annual percentage rate, or APR, for this financing? a. 10.00% b. 12.12% c. 10.67% d. 13.33% 9) A bank is legally obligated to provide credit under a revolving credit agreement, but not under a line of credit. a. True b. False 10) The PMI, Inc. processes an estimated 200,000 checks per year from its customers. Total revenue collected by check is $40,000,000. The average float time until the funds are credited to PMI's checking account is 6 days. For an extra cost of $ .06/check, PMI's bank will install a lock-box system that will reduce float time from 6 days to 2.5 days. If PMI earns 3.5% on its checking account, how much per check will PMI make if it uses the lock-box system? a. $.005 b. $.006 c. $.007 d. $.008 11) The time necessary for a deposited check to clear through the commercial banking system causes which of the following types of floats? a. mail b. processing c. transit d. disbursing 12) Effective cash management involves the tradeoff between the risk of insolvency (resulting in higher near cash balances) and the desire to earn higher returns (resulting in lower near cash balances). a. True b. False 13) Assume that liquid funds can be invested to yield 4.5 percent. If annual remittance checks total $2 billion, what is it worth for the firm to reduce float by 1 day? a. $388,349 b. $246,575 c. $257,534 d. $24,658 14) A large corporation has annual sales revenues of $6 billion. The corporation currently earns 2.25% on its money market account. If the corporation can reduce its float by three days by making its billing and collection functions more efficient, the company's operating profits will increase by approximately a. $3,069,863 b. $2,196,500 c. $1,350,000 d. $1,109,589 15) The speed of the collections process is determined by three types of float: mail float, processing float, and transit float. a. True b. False 16) If you were a treasurer for a Fortune 1,000 corporation who has responsibility for investing "excess cash balances," which of the following alternatives would you be least likely to select? a. commercial paper b. common stock c. bankers' acceptances d. U.S. Treasury bills 17) Flashbinder Guitars, Inc. is considering a lockbox system that will increase its check processing cost by $.20 per check. The company estimates an average check size of $900 and expects any funds freed up by the new lockbox system can be invested in an account that earns 4% per year before taxes. What reduction in collection time is necessary for the lockbox to be beneficial to Flashbinder Guitars Inc.? a. 1.96 days b. 2.03 days c. 1.73 days d. 2.15 days 18) Determine the effective annualized cost of forgoing the trade discount on terms 2/15 net 65. a. 11.30% b. 14.69% c. 32.6% d. 48.98% 19) A British-made component costs 36 U.K. pounds. A company in the United States needs to buy these components and the current indirect quote indicates that one dollar will buy .6250 pounds. Ignoring transactions costs, how much will one component cost in U.S. dollars? a. $22.50 b. $45.94 c. $57.60 d. $72.00 20) If you are an importer of goods and you need to make payment for the purchase of inventory before the close of business today, which of the below is the correct term for the exchange rate that you will use? a. indirect rate b. spot rate c. direct rate d. forward rate