Direction: Read the statements carefully. Write TRUE if the statement is correct. Otherwise, write FALSE. ( 1. The sum of the time taken from the payment for the purchase of the raw material inventories to the receipt of cash from customers is known as the accounts receivable cycle. 2. It is wise to offer unlimited credit to any potential customer who seeks it to have more sales. 3. One way to establish effective administration of receivables is to systematically review them and that slow payers are sent reminders. 4. An objective of working capital management is to maximize the length of the operating cash cycle. 5. Low inventories imply more frequent ordering. 6. The Economic Order Quantity model is designed to determine how much total inventory a firm needs in a year. 7. Control of working capital through the use of detailed plans in the form of budgets can
Direction: Read the statements carefully. Write TRUE if the statement is correct. Otherwise, write FALSE. ( 1. The sum of the time taken from the payment for the purchase of the raw material inventories to the receipt of cash from customers is known as the accounts receivable cycle. 2. It is wise to offer unlimited credit to any potential customer who seeks it to have more sales. 3. One way to establish effective administration of receivables is to systematically review them and that slow payers are sent reminders. 4. An objective of working capital management is to maximize the length of the operating cash cycle. 5. Low inventories imply more frequent ordering. 6. The Economic Order Quantity model is designed to determine how much total inventory a firm needs in a year. 7. Control of working capital through the use of detailed plans in the form of budgets can
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Transcribed Image Text:Direction: Read the statements carefully. Write TRUE if the statement is correct. Otherwise,
write FALSE.
1. The sum of the time taken from the payment for the purchase of the raw material
inventories to the receipt of cash from customers is known as the accounts receivable cycle.
2. It is wise to offer unlimited credit to any potential customer who seeks it to have more
sales.
3. One way to establish effective administration of receivables is to systematically review
them and that slow payers are sent reminders.
4. An objective of working capital management is to maximize the length of the operating
cash cycle.
5. Low inventories imply more frequent ordering.
6. The Economic Order Quantity model is designed to determine how much total
inventory a firm needs in a year.
_7. Control of working capital through the use of detailed plans in the form of budgets can
be very beneficial.
8. One of the 5Cs of Credit is character. It refers to the customer's willingness to meet
credit obligations.
9. The ABC approach to inventory management is based on the concept that the
inventory period should be constant for all inventory items.
_10. At the economic order quantity size, the total costs equal the carrying costs.
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