Resultsch18

Contemporary Business Chapter 18 Date / Time Student Score Passing Score Result March 15, 2024 2:14 am 93.54 50 Pass Contemporary Business Chapter 18 # Question Correct Answer Student Answer Result Points Awarded 1 From what Marco has shared, how would you advise Marco to proceed? Marco can assess his short- term financial structure by measuring working capital through the use of his balance sheet and subtracting current liabilities from current assets. Marco can assess his short- term financial structure by measuring working capital through the use of his balance sheet and subtracting current liabilities from current assets. Correct 1 2 Which is more likely? Marco should balance inventory needs by making sure there is sufficient inventory on hand to meet customer demand but not so much that day-to-day operations are compromised by having too much cash tied up in inventory. Marco should balance inventory needs by making sure there is sufficient inventory on hand to meet customer demand but not so much that day-to-day operations are compromised by having too much cash tied up in inventory. Correct 1 3 Used to pay day-to-day expenses. Many organizations maintain a minimum balance in order to have funds available for unexpected expenses. cash cash Correct 1 4 Low-risk investments with short maturities that can be easily sold in secondary markets. Used as an investment vehicle for cash that is not needed immediately. marketable securities marketable securities Correct 1 5 Uncollected credit sales that may represent a significant portion of a company’s assets. Companies need to ensure regular collection of outstanding credit sales, while still offering sufficient credit to customers to generate additional sales. accounts receivable accounts receivable Correct 1 6 Often the largest single asset for retailers and represents goods that are either available for sale or being converted into items available for sale. This includes working capital management, measured as current assets less current liabilities. inventory inventory Correct 1 7 Investments in long-lived assets that are expected to produce economic benefits for more than one year. These investments require a substantial amount of money. capital investment capital investment Correct 1 8 Includes activities that reduce the risks associated with exchange rate fluctuations. One such tool is balance sheet hedging. international assets management international assets management Correct 1 9 In reviewing his balance sheet, Marco calculates that Cutting Edge has financed 70% of its assets through equity and 30% through debt. Help Marco by identifying what this is called. capital structure capital structure Correct 1 10 If Marco follows Ardala’s advice, which of following funding / capital structure options would he be implementing? leverage leverage Correct 1 11 A company’s mix of debt and equity capital structure capital structure Correct 1 12 Borrowing money from the bank debt capital debt capital Correct 1 13 A company issuing shares equity capital equity capital Correct 1 14 Borrowing money with the goal of increasing returns on equity leverage leverage Correct 1 15 Securing a 5-year bank loan to purchase equipment mixing short-term and long- term funds mixing short-term and long- term funds Correct 1 16 Management’s decision to use debt instead of equity capital structure decision capital structure decision Correct 1 17 Management’s decision to issue regular dividends mixing short-term and long- term funds capital structure decision Incorrect 0 18 Securing a line of credit for inventory mixing short-term and long- term funds mixing short-term and long- term funds Correct 1 19 Reinvested earnings equity capital equity capital Correct 1 20 Management’s commitment to relying on less debt capital structure decision capital structure decision Correct 1 21 Review the email and determine what method of short-term funding the sender is likely suggesting. commercial paper commercial paper Correct 1 22 Review the email and determine what method of short-term funding the sender is likely suggesting. factoring factoring Correct 1 23 Review the email and determine what method of short-term funding the sender is likely suggesting. trade credit trade credit Correct 1 24 Review the email and determine what method of short-term funding the sender is likely suggesting. revolving credit agreement revolving credit agreement Correct 1 25 This short-term funding specifies the maximum amount of money a company can borrow over a period of time, generally a year. The bank will only lend the money if the funds are available. Generally, it requires monthly interest payments and repayment of the principal within a year. lines of credit lines of credit Correct 1 26 Extended by suppliers when a company receives goods or services and agrees to pay for them at a later date, this type of funding is common in many industries such as retailing and manufacturing and has zero financing costs when paid within the terms of the agreement. trade credit trade credit Correct 1 27 This involves selling the company’s accounts receivable to either a bank or finance company at a discount. This type of funding facilitates the quick conversion of accounts receivable into cash, without the need for collections. factoring factoring Correct 1 28 This type of funding specifies the maximum amount of money a company can borrow, and funds are guaranteed to be available when needed. Monthly interest payments plus an additional fee are generally required, along with repayment of the principal within a year. revolving credit agreement revolving credit agreement Correct 1 29 This type of funding is extended by commercial banks and finance companies as a significant source of short-term financing for accounts receivable and inventory related to timing differences resulting from seasonal sales fluctuations. It may require specific assets (accounts receivable and/or inventory) to be pledged as collateral. short-term loans short-term loans Correct 1 30 This short-term IOU is sold by a company, typically in multiples of $100,000 to $1,000,000 with maturity dates ranging from 1 to 270 days. With interest rates typically 1% to 2% lower than those of the banks, these loans are usually restricted to large, financially secure corporations. commercial paper commercial paper Correct 1 31 What is your assessment of the company’s short-term financing needs? revolving credit agreement commercial paper Incorrect 0