Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
12th Edition
ISBN: 9781259144387
Author: Richard A Brealey, Stewart C Myers, Franklin Allen
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 30, Problem 9PS
Cash management Complete the passage that follows by choosing the appropriate terms from the following list: lockbox banking, Fedwire, CHIPS, concentration banking.
Firms can increase their cash resources by speeding up collections. One way to do this is to arrange for payments to be made to regional offices that pay the checks into local banks. This is known as ______. Surplus funds are then transferred from the local bank to one of the company’s main banks. Transfers can be made electronically by the ______ or ______ systems. Another technique is to arrange for a local bank to collect the checks directly from a post office box. This is known as ______.
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One objective of managing a firm's cash is to process its cash receipts as quickly as possible. Banks provide many services to process incoming payments quickly and efficiently. Consider the case of Sandberg Industries: Sandberg Industries owns an office building that it fents to Graham Company. Sandberg Industries and Graham have an agreement in which Graham's bank transfers the monthly rent automatically to Sandberg Industries' account. Which cash management technique is Sandberg using?
Concentration banking
A preauthorized check
A lockbox arrangement
This refers to a bank that has agreement with the clearinghouse to exchange checks.
A. Commercial Bank
B. Correspondent Bank
C. Universal Bank
D. Concentration Banking
2. Firms hold cash for the purpose of taking advantage of investment opportunities.
A. Precautionary Motive
B. Transaction Balance
C. Compensating Balance
D. Speculative Motive
3.
This refers to the process of monitoring and analyzing the amount of cash needed and how it can be generated.
A. Cash Monitoring
B. Cash Balances
C. Cash Management
D. Cash Forecasting
Construct a list of steps for making a cash withdrawal from an automated teller machine (ATM). Assume that the process begins at the ATM with your bank card in hand. Then identify the potential failure points (i.e., where problems might arise in the process). For each failure point, state onepotential problem.
Chapter 30 Solutions
Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Ch. 30 - Inventory What are the trade-offs involved in the...Ch. 30 - Prob. 2PSCh. 30 - Prob. 3PSCh. 30 - Prob. 4PSCh. 30 - Prob. 5PSCh. 30 - Prob. 6PSCh. 30 - Prob. 7PSCh. 30 - Credit policy How should your willingness to grant...Ch. 30 - Cash management Complete the passage that follows...Ch. 30 - Prob. 10PS
Ch. 30 - Prob. 11PSCh. 30 - Prob. 12PSCh. 30 - Prob. 13PSCh. 30 - Prob. 14PSCh. 30 - Credit terms Phoenix Lambert currently sells its...Ch. 30 - Prob. 16PSCh. 30 - Prob. 17PSCh. 30 - Prob. 18PSCh. 30 - Prob. 19PSCh. 30 - Prob. 20PSCh. 30 - Prob. 21PSCh. 30 - Prob. 22PSCh. 30 - Prob. 23PSCh. 30 - Prob. 24PSCh. 30 - Prob. 25PSCh. 30 - Money-market yields In Section 30-4 we described a...Ch. 30 - Money-market yields Look again at the previous...Ch. 30 - Prob. 29PSCh. 30 - Prob. 30PSCh. 30 - Prob. 31PSCh. 30 - Prob. 33PS
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