BEC - 13

Question 1

Cash Cycle

Answer 1

aka operating cycle

inventory conversion cycle + AR conversion cycle - AP conversion cycle

Question 2

SaaS

Answer 2

Software as a System

the use of the cloud to access software

Question 3

Ascending hierarchy of data in a system

Answer 3

Character
Field
Record
FIle

Question 4

In the short run, a firm in monopolistic competition will maximize profit by producing at which level?

Answer 4

Marginal revenue = marginal cost

At that level of production, the revenue from the last unit produced is exactly equal to the cost of producing that unit

Question 5

Does the use of short-term financing require collateral and/or impose restrictive terms on the borrower?

Answer 5

Collateral: NO
Restrictive terms: NO

AP and accrued payables, for example, do not require either collateral or have restrictive terms.

Question 6

The optimal capitalization for an organization can usually be determined by the:

Answer 6

Lowest total weighted-average cost of capital.

The lowest total weighted-average cost of capital usually would be the optimal capitalization and would maximize the value of the firm’s stock

Question 7

ROI Formula

Answer 7

Net Income / Average Total Assets

Question 8

Residual Income Formula

Answer 8

Net Income - Required Rate of Return

Example:
Revenues $80,000
COGS $45,000
G&A $15,000

Required rate of return 18%
Equipment Cost $100,000

(80k-45k-15k)=20k
18% x 100k = 18k
20k - 18k = 2k residual income

Question 9

Which form of collateral is most commonly used as security for short-term loans?

Answer 9

Inventory

Such loans may be in the form of a revolving line of credit that is related directly to the value of the inventory that serves as security.

Question 10

Relevant costs to make

Answer 10

Equal only AVOIDABLE COSTS