Item 1 of 25Which of the following statements is incorrect about working capital policy?Select the correct response:Credit policy has an impact on working capital since it has the potential to influence sales levels and the speed with which cash is collected.Managing working capital levels is important to the financial staff since it influences financing decisions and overall profitability of the firm.Holding minimal levels of inventory can reduce inventory carrying costs and cannot lead to any adverse effects on profitability.O A company may hold a relatively large amount of cash if it anticipates uncertain sales levels in the coming year.The cash budget is useful in determining future financing needs.

The amount of money a firm invests in current assets in order to accomplish its sales goals is…

Answered: Which of the following statements is…

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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Which of the following statements is most accurate? A. Financial leverage is directly related to operating leverage. B. Increasing the corporate tax rate will not affect capital structure decisions. C. A firm with low operating leverage has a small proportion of its total costs in fixed costs. D. Total costs can be calculated as net income minus total revenue.
The business risk of a company is most accurately measured by the company's: a. Debt-to-equity ratio B. Efficiency in using assets to generate sales c. Operating leverage and level of uncertainty about demand, output prices and competition
Qualified accountants have superior knowledge of tax and financial reporting What sort of power do they exert over other managers in an organisation OA Coercive power Expert power Referent power Reward power The cross elasticity of demand between Product M and Product N is positive. What is the correct description of both Product M and Product N ? Complementary goods Veblen goods Giffen goods Substitute goods
2. A manager of a retailing firms says that he can lower his operating leverage by renting his stores rather than buying. Would you recommend this？Explain
Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of the following factors are outside a firm's control? Check all that apply. Tax rate The inflation rate The firm's capital budgeting decision rules The impact of a firm's cost of capital on managerial decisions Consider the following case: Acme Manufacturing Corporation has two divisions, L and H. Division L is the company's low-risk division and would have a weighted average cost of capital of 8% if it was operated as an independent company. Division H is the company's high-risk division and would have a weighted average cost of capital of 14% if it was operated as an independent company. Because the two divisions are the same size, the company has a composite weighted average cost of capital of 11%. Division L is considering a project with an expected return of 9.5%. Should Acme Manufacturing Corporation accept or reject the project? O Reject the project O Accept the project On what…
ahagers prefer lower inventory quantities since costs are associated with carrying inventories 3. When an entity's net working capital is negative, current liabilities exceed current assets. 4. Entities would prefer to convert inventories to cash the fastest way possible. 5. Working capital management is critical in every organization. 6. At the economic order quantity, carrying costs exceed ordering costs. 7. The higher the firm's current assets, the higher the profitability and the higher the risk. wans 8. The reorder point is measured as the lead time in order processing multiplied by daily inventory usage. 9. A firm's choice in the level of its working capital reflects its risk preference. 10.A safety stock prevents the occurrence of stock outs. ost-activity irections: Answer the following questions briefly. Points will be based on the given rubrics.
Select all that is true about the role of financial managers and the types of financial decisions they make. Select one or more: a. Capital structure describes the mix of short-term liabilities a firm uses to finance its short-term assets. b. The optimal financial management strategy of a financial manager is to reduce the overall risk level of the firm. c. The duties of the financial manager includes determining the capital structure and which projects the firm should undertake. Od. Size and timing of cash flows is unimportant in a capital budgeting decision. e. Capital Budgeting function involves planning and determining the firm's short term investments. Of. Determining the appropriate level of inventory is a working capital management function. ZA do W X L
Is it easier for a large company to adjust than a small company if market size increases and the retailer does not maintain its budgeted share of the market size? Is this because of the size of the company or the size of the market? Why?
Short-term thinking can be disastrous for a business. What indicators are there to show that financial managers at Range take long-term approach to financial performance and control?
Which of the following is most consistent with using debt to reduce agency costs or conflicts? Question 11 options: Increasing debt reduces a firm’s business risk The interest paid on debt reduces taxable income and income taxes The interest paid on debt reduces cash that management of a firm might otherwise waste or use poorly The issuance of debt helps firms increase their credit rating
Which one of the following characteristics of the positive accounting theory brings forward the problem of Opportunistic Behavior? Oa. It wants to minimize costs associated with contracts of the firm. O b. It recognizes the flexibility in choosing accounting policies by the firm. O c. It recognizes the existence of economic consequences in the firm. O d. It aims to maximize the prospects for survival of the firm.
Khadi and Village industries, being a part of MSME, were facing some issues related to sales with a fir big brand apparel industry competitors. The length of production is small and labour intensive whereas the inventory holding period and average collection are huge. Reducing operations is also not a way to deal in this situation. You are appointed as a finance manager Management. You further faces the problem of compromising between liquidity and profitability. What strategies you would adopt as finance manger to solve this problem. the company to deal with the problem of Working Capital

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