Which of the following will reduce the liquidity of a firm? An increase in

Seleccione una:

a. short-term notes payable.

b. accounts payable.

c. current assets.

d. both A and B.

Disadvantages of using current liabilities as opposed to long-term debt include

Seleccione una:

a. greater risk of illiquidity.

b. uncertainty of interest costs.

c. higher cash flow exposure.

d. both A and B.

With respect to working capital policy, firms most often employ

Seleccione una:

a. a cautious approach which finances short-term assets with long-term financing.

b. the principle of self-liquidating debt.

c. an aggressive approach which finances long-term assets with short-term financing.

d. the principle of liquidity optimization.

J.B. 's Wholesale Club has current assets of $12.25 million and current liabilities of $14 million. Which of the following is possible.

Seleccione una:

a. J.B. makes efficient use of its current assets.

b. J.B. may be at some risk of being unable to pay its bills.

c. J.B. appears to be overinvesting in current assets.

d. Either or both A and B may be true.

Which of the following is considered to be a spontaneous source of financing?

Seleccione una:

a. Operating leases

b. Accounts receivable

c. Inventory

d. Accounts payable

If management expects interest rates to rise and credit to tighten in the near future, it should consider

Seleccione una:

a. increasing its use of commercial paper and loans secured by current assets.

b. decreasing the use of spontaneous financing.

c. decreasing the level of permanent financing.

d. increasing the level of permanent financing.

The cost of trade credit varies with the

Seleccione una:

a. size of the cash discount.

b. length of time between the end of the discount period and the final due date.

c. length of time between the end of the discount period and when the firm purchased from the supplier.

d. both A and C.