Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

FINMAN > P2 > Flashcards

P2 Flashcards

1
Q

Working capital

A

Current asset

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Comprises assets that are used in the company’s normal operations and replaced all during the year

A

Working capital

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Comprises assets that are used in the company’s normal operations and replaced all during the year

A

Working capital

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Deducted from working capital

A

Current assets that are not used in normal operations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Working capital includes?

A

Cash
Accounts receivable
Inventories

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Formula to get NET WORKING CAPITAL

A

Current Assets-Current Liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Working capital- interest free loans

A

Net Working Capital

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Represent the amount of money the company obtain from non-free sources to carry its non-current asset.

A

Net Working Capital

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Total amount of interest free loans and accruals are ______ to the net working capital

A

Deducted

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

When getting bank loan, they considering your?

A

Status of cash flow

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Types of current asset investment policies

A

Relaxed
Restricted
Moderate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Illustration of the direct relationship of sales and current assets for every investment policy

A

Linear
Curvilinear

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Type of relationship of sales and current asset for every investment policy

A

Direct

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

The company holds a great deal of cash, receivables, marketable securities and inventories relative to its sales

A

Relaxed current asset investment policy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Holdings of current assets are minimize

A

Restricted current asset investment policy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Between relaxed and restricted policies

A

Moderate current asset investment policy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Relatively large amounts of cash, marketable securities, and inventories are carried

A

Relaxed current asset investment policy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Liberal credit policy result in a high level of receivables

A

Relaxed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Holding current assets are constrained

A

Restricted

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Current asset

A

Cash
Receivables
Marketable securities
Inventories

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Low level of asset which results in a high ROE, other things held constant

A

Restricted

22
Q

Formula of ROE

A

(Net Income÷sales)×(sales÷assets)×(assets÷equity)

23
Q

Current assets can be?

A

Temporary
Permanent

24
Q

Company maintains even at the low point of the business cycle

A

Permanent current asset

25
Q

Fluctuate with seasonal or cyclical variations of sales

A

Temporary current assets

26
Q

Types of current assets financing policies

A

Moderate approach or maturity matching or self-liquidating approach
Aggressive approach
Conservative approach

27
Q

Calls for matching asset or liability maturities

A

Moderate approach
Maturity matching
Self-liquidating approach

28
Q

Maturity matching

A

Moderate approach

29
Q

Self-liquidating approach

A

Moderate approach

30
Q

Finances some if its permanent assets with short-term debt.

A

Aggressive Approach

31
Q

Mismatching of assets and liablities

A

Aggressive approach

32
Q

Long-term capital is used to finance all the permanent assets and to meet some of the seasonal needs

A

Conservative approach

33
Q

Process undertaken by the company to purchase or produced inventory, hold it for a time and then sell it and received cash

A

Cash conversion cycle or CCC

34
Q

CCC

A

Cash Conversion Cycle

35
Q

It is the length of time funds are tied up in working capital or the length of time between paying for working capital and collecting cash from the sale of the working capital

A

CCC

36
Q

Formula to get CCC

A

CCC= ICP+ACP-PDP

37
Q

Average time required to convert raw materials into finished goods and then to sell them

A

ICP or Inventory Conversion Period

38
Q

Average length of time required to convert the firm’s receivables to cash, that is, to collect cash following a sale

A

Average Collection Period or ACP

39
Q

Average length of time between the purchase of material and labor and the payment of cash for them

A

PDP or Payables Deferred Period

40
Q

Formula to get ICP

A

Inventory ÷ Cost of good sold per day

41
Q

Currency (bills or coins)

A

Cash

42
Q

More important than currency for most businesses

A

Bank demand (or checking) deposits

43
Q

Used to pay for labor and raw materials, purchasing fixed assets, paying taxes, servicing debt, paying dividends, and other business transaction

A

Bank demand (or checking) deposits

44
Q

Do not earn any interest so companies try to minimize amount of deposits while maintaining enough balance to pay the obligations in a timely basis

A

Bank demand (or checking) deposits

45
Q

Post office box operated by a bank to which payments are sent.

A

Lockbox

46
Q

Used to speed up effective receipt of cash

A

Lockbox

47
Q

Short term securities

A

Cash Equivalents

48
Q

Companies also purchase marketable securities as cash builds up from operations and then sell those securities when they need cash

A

Cash Equivalents or short term securities

49
Q

Primary forecasting tool used by companies to forecast their cash flows

A

Cash budget

50
Q

A table shows cash receipts, disbursements and balances over some period

A

Cash budget

51
Q

A table shows cash receipts, disbursements and balances over some period

A

Cash budget

FINMAN (6 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions