MGMT 321-Chapter 14

Question 1

Cash to cash cycles

Answer 1

Time that is required for a business to acquire resources, convert them into product, sell the product, & receive cash from the sale

Question 2

Marketable securities

Answer 2

Stocks and bonds that are traded on an open market

Question 3

commercial paper

Answer 3

notes issued by credit-worthy corporations

Question 4

company book balance

Answer 4

sum of cash inflows and cash outflows recorded in the firms’ accounting records

Question 5

clearinghouse

Answer 5

entity that processes checks and electronic fund transfers for banks and other financial organizations

Question 6

float

Answer 6

delays in the movement of money among depositors and banks

Question 7

reconciling

Answer 7

accounting process that identifies the causes of all differences between book and bank balances

Question 8

cash receipts budget

Answer 8

schedule of the amounts and timings of the receipt of cash into a business

Question 9

noncore projects

Answer 9

revenue-producing tasks and activities related to, but not part of, the primary strategy of a business

Question 10

factoring receivables

Answer 10

borrowing money secured by a firm’s accounts receivable

Question 11

growth trap

Answer 11

financial crisis that is caused by a business growing faster than it can be financed

Question 12

Why do 2/3 of small businesses experience money problems?

Answer 12

• difficulty collecting money from customers
• seasonal variation in sales
• unexpected decreases in sales

Question 13

Three forms of cash

Answer 13

• Currency
• Demand deposits
• traveler’s checks

Question 14

three sources of cash

Answer 14

• operations (stores, etc)
• investing
• financing