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Assume a firm's production process requires an average of 80 days to go from raw materials to finished products and another 40 days before the finished goods are sold. If the accounts receivable cycle is 70 days and the accounts payable cycle is 80 days, what would the operating cycle be?
The time between ordering materials and collecting cash from receivables is known as the:
The time between when the firm pays its suppliers and when it collects money from its customers is known as the:
Which of the following is not an advantage of short-term borrowing?
In June, Erie Plastics had an ending cash balance of $35,000. In July, the firm had total cash receipts of $40,000 and total cash disbursements of $50,000. The minimum cash balance required by the firm is $25,000. At the end of July, Erie Plastics had
A compensating balance on a bank loan effectively ____________ the cost of the loan.
In order to borrow $100,000 for a 10% loan on discount basis, the firm will actually have to borrow:
When old short-term debt is replaced by new short-term debt as the old debt comes due, the process is known as:
Which of the following short-term sources of funds is available only to the financially strongest concerns?
If a firm actually sells its accounts receivable, the process is known as:
The ratio between the present value of a project's cash inflows and the present value of its initial investment is called the:
Internal rate of return (IRR) and net present value (NPV) methods:
Which of the following is not considered a stage in the capital budgeting process?
The internal rate of return concept is best explained by which of the following?
The payback period concept is best explained by which of the following?
The cost of debt:
As a general rule, the capital structure that maximizes stock price also:
The after-tax cost of debt for a firm in the 35% tax bracket with a before-tax cost of debt of 6% is:
Ningbo Shipping has issued preferred stock at its $125 per share par value. The stock will pay a $15 annual dividend. The cost of issuing and selling the stock was $4 per share. The cost of Ningbo Shipping pref