Essentially, a convertible bond is a portfolio of: a. a bond and an automobile whose top can be removed. b. an otherwise equivalent nonconvertible bond and shares of the issuing firm’s stock. c. an otherwise equivalent nonconvertible bond and a call option on the firm’s stock. d. an otherwise equivalent nonconvertible bond and a put […]
The sales for January, February, and March are $50,000, $80,000 and $120,000, respectively. For any particular month of sales, the following percentages are received over time in cash: 40% in cash from that same month of sales; 50% in cash from the previous month’s sales; and, 10% in cash from the sales from two months […]
A financial manager needs to know if any of the credit sales will not be paid by customers. This situation will entail a reduction in the estimate of the cash flow due to “bad debts.” Indicate whether the statement is true or false. ANSWER Answer: TRUE
The sales for January, February, and March are $2,000, $6,000 and $10,000, respectively. For any particular month of sales the following percentages are received over time in cash for any given month: 50% in cash from that same month of sales; 30% in cash from the previous month’s sales; and 20% in cash from the […]
The amount of sales a company predicts is a function of two types of data. Which of the types below is one of these two types? A) Accounting data B) Internal data C) Rationing data D) Legal data ANSWER Answer: B Explanation: B) The amount of sales a company predicts is a function […]
Based on the sales forecast, the finance manager estimates the receipt of cash based on cash and ________. A) credit sales B) inventory sales C) accounts receivables D) net income ANSWER Answer: A
________ consists of items such as number of sales personnel in the field and average sales per representative, competitors and alternative products, and production capabilities and schedules as well as other factors known mainly to the company. A) External data B) Product data C) Employee data D) Internal data ANSWER Answer: D Explanation: […]
The aggressive funding strategy is a strategy by which a firm finances all projected funds requirements with long-term funds and uses short-term financing only for emergencies or unexpected outflows. Indicate whether the statement is true or false ANSWER FALSE
For a firm, bank loans can be a source of cash and interest payments to the bank can be a use of cash. Indicate whether the statement is true or false. ANSWER Answer: TRUE
________ consists of items such as the current interest rates, housing starts, gross national product (GNP), disposable income estimates, or other economic indicators. A) Accounting data B) Internal data C) External data D) Financial data ANSWER Answer: C Explanation: C) The amount of sales a company predicts is a function of external data, […]
