True or False The cash conversion cycle is the sum of the inventory conversion period, the receivables collection period, and the days payables outstanding. * True False The best and most comprehensive picture of a firm's liquidity position is obtained by examining its cash budget. True False A firm's goal should be to lengthen the cash conversion cycle since shorter cash conversion cycles leads firms to increase their dependence on costly external financing. * True False The larger the investment a firm makes in its current assets, the higher its carrying costs will be. * True False Other things held constant, if a firm "stretches" (i.e., delays paying) its accounts payable, this will lengthen its cash conversion cycle (CCC). * True False Short-term financial policies that are flexible with regard to current assets includes keeping large balance of short-term debt. * True False Costs that fall with increases in the level of investment in current assets are called shortage costs. * True False The firm further increases the effective interest rate earned by the bank on the committed line of credit. * True False Short-term assets can always be financed with short-term debt, and long- term assets can be financed with long-term debt and equity, in an ideal economy. True False Security for short-term or long-term loans usually consists of accounts receivable, inventories, or both. * True False
True or False The cash conversion cycle is the sum of the inventory conversion period, the receivables collection period, and the days payables outstanding. * True False The best and most comprehensive picture of a firm's liquidity position is obtained by examining its cash budget. True False A firm's goal should be to lengthen the cash conversion cycle since shorter cash conversion cycles leads firms to increase their dependence on costly external financing. * True False The larger the investment a firm makes in its current assets, the higher its carrying costs will be. * True False Other things held constant, if a firm "stretches" (i.e., delays paying) its accounts payable, this will lengthen its cash conversion cycle (CCC). * True False Short-term financial policies that are flexible with regard to current assets includes keeping large balance of short-term debt. * True False Costs that fall with increases in the level of investment in current assets are called shortage costs. * True False The firm further increases the effective interest rate earned by the bank on the committed line of credit. * True False Short-term assets can always be financed with short-term debt, and long- term assets can be financed with long-term debt and equity, in an ideal economy. True False Security for short-term or long-term loans usually consists of accounts receivable, inventories, or both. * True False
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter9: Corporate Valuation And Financial Planning
Section: Chapter Questions
Problem 6Q
Related questions
Question
Transcribed Image Text:True or False
The cash conversion cycle is the sum of the inventory conversion period,
the receivables collection period, and the days payables outstanding. *
True
False
The best and most comprehensive picture of a firm's liquidity position is
obtained by examining its cash budget. *
True
False
A firm's goal should be to lengthen the cash conversion cycle since shorter
cash conversion cycles leads firms to increase their dependence on costly
external financing. *
True
False
The larger the investment a firm makes in its current assets, the higher its
carrying costs will be. *
True
False
Other things held constant, if a firm "stretches" (i.e., delays paying) its
accounts payable, this will lengthen its cash conversion cycle (CCC). *
True
False
Short-term financial policies that are flexible with regard to current assets
includes keeping large balance of short-term debt. *
True
False
Costs that fall with increases in the level of investment in current assets are
called shortage costs. *
True
False
The firm further increases the effective interest rate earned by the bank on
the committed line of credit. *
True
False
Short-term assets can always be financed with short-term debt, and long-
term assets can be financed with long-term debt and equity, in an ideal
economy.
True
False
Security for short-term or long-term loans usually consists of accounts
receivable, inventories, or both. *
True
False
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT