Under which circumstance would a company want to reexamine its level of working capital?

a.) If a company has excessive capital invested in the short term

b.) If a company has sufficient operating liquidity

c.) If a company has positive working capital

d.) If a company's current assets exceed its current liabilities

Which of the following is a goal of working capital management?

• a.)To maximize profitability at the expense of liquidity
• b.)To accumulate as much cash and cash equivalents as possible
• c.)To balance profitability and liquidity in order to meet growth objectives
• d.)To minimize the cash conversion cycle and, if possible, invert it

Consider the following data from a company's 90-day operating cycle:

• Inventory days: 65
• Receivable days: 25
• Payable days: 10

What is the cash conversion cycle for this company?

• a.)100
• b.)50
• c.)30
• d.)80

With respect to disbursements, a company can manage their cash more efficiently by __________.

• a.)using lockbox banking
• b.)making use of credit
• c.)paying with cash
• d.)minimizing float time

Which of the following describes debt securities, rather than equity securities or derivatives?

• a.)They are generally the lowest-risk.
• b.)They are sold on a public exchange.
• c.)They typically generate the largest returns.
• d.)They do not have a fixed term.

Place the following steps for developing a credit policy in the correct order of process:

• A: The company decides that it wants to prioritize a large volume of sales, even if it means accepting more bad debt
• B: The company decides that if a customer fails to pay, they will not pursue legal action.
• C: The company decides that it's willing to offer payment terms of 3/10, Net 30.

• a.)A, C, B
• b.)C, B, A
• c.)A, B, C
• d.)B, C, A

What type of inventory do flour and milk represent for a baked goods business?

• a.)Finished goods
• b.)Work in process
• c.)Raw materials
• d.)Class A

Ray has a great idea for a dating app, but he doesn't have the funds to develop and launch it. His brother offers to help him develop it for free, in exchange for a percentage of future profits. What type of financing resource is Ray using?

• a.)Trade credit
• b.)Factoring
• c.)Peer-to-peer lending
• d.)Sweat equity