Financial Management 3

Question 1

Average daily sales times average collection period equals

Answer 1

average receivables balance.

Question 2

maximizes the float involved in cash disbursements

Answer 2

is the major advantage of a zero-balance account system

Question 3

High marginal tax rates and few noninterest tax benefits

Answer 3

maximises deduction for interest on debt

Question 4

a time draft payable on a specified date and guaranteed by the bank

Answer 4

is banker’s acceptance

Question 5

The cost of carrying inventory

Answer 5

should cause management to reduce the average inventory

Question 6

minimize weighted-average cost of capital (WACC)

Answer 6

is what All companies strive for

looks better to potential investors

Question 7

what involves no fixed charges, no fixed maturity dates and will increase the creditworthiness of the company.

Answer 7

issuance of common stock

Question 8

is not an advantage to a corporation that uses the commercial paper market for short-term financing

Answer 8

Only very creditworthy firms can issue commercial paper