All of the following are reasons money will adhere to PPP accurately EXCEPT A) Electronic transfers B) Universal value C) Easily determined price D) Not substitutable ANSWER D
Date: September 19th, 2020
The primary reason for offering customers credit is to A) increase the predictability of cash flows. B) stimulate sales. C) smooth billing cycles. D) reduce the risk of nonpayment. E) speed cash flows. ANSWER B
Date: September 19th, 2020
Income Statement CFM Majestic Inc. Years 1 & 2 ($000,000s) Year 1 Year 2 Sales 381.9 416.3 COGS 244.9 278.9 SG&A 59.7 63.8 Depreciation 13.8 15.4 R & D 5.3 4.3 EBIT 58.2 53.9 Interest Expense 7.3 7.9 Earnings before Income Tax 50.9 46.0 Income Taxes 17.3 14.8 Net Income 33.6 31.2 Referring to the […]
Date: September 19th, 2020
Many industries offer trade credit so frequently, that failing to do so would result in failure. What is the real credit decision for companies in such industries? A) What terms to offer B) Which collection company to use C) How to obtain credit for purchases D) Maximum credit to extend ANSWER A
Date: September 19th, 2020
What is a widely used method to speed up the collection of accounts receivable? A) Zero Rate B) Cash Discounts C) LIFO D) Late Penalties ANSWER B
Date: September 19th, 2020
If credit terms are 2/30, net 60, what is the effective annual rate for a customer’s loan when the customer pays the invoice in 60 days? A) 44% B) 16% C) 59% D) 11% E) 28% ANSWER E
Date: September 19th, 2020
The main conclusion drawn from the theory of interest rate parity is that A) a single currency will increase economic welfare. B) arbitrage opportunities may persist for long periods of time. C) investors can seldom earn higher returns from foreign investments than from domestic ones. D) exchange rates adjust slowly to their proper levels. E) […]
Date: September 19th, 2020
Optimal credit policy is one in which the A) increased cash flow from sales equals the carrying cost of accounts receivable. B) sales of a firm are maximized. C) increased profit from sales equals the costs of carrying and administering accounts receivable. D) customers pay their bills on time, without exception. E) costs of taking […]
Date: September 19th, 2020
All of the following are sources of political risk EXCEPT A) tax holidays. B) change in government. C) tariff increases. D) labor law changes. ANSWER A
Date: September 19th, 2020
All of the following are costs of credit EXCEPT A) bad debt losses. B) credit analysis expenses. C) lost revenues when customers do not take advantage of trade discounts. D) the increased investment in accounts receivable. ANSWER C
Date: September 19th, 2020
