STFM EXAM 1 QUESTIONS AND ANSWERS
A successful firm manages its operations from:
a profit perspective
a cash flow perspective
a sales increase perspective
2 and 3
2 only
1 and 2
1 only
1 and 3 - CORRECT ANSWER✅✅1 and 2
A shorter cash conversion cycle generally implies a(n) ___________ in firm liquidity.
Worsening
Cannot be determined from this information
Improvement
No change - CORRECT ANSWER✅✅Improvement
As sales grow, some of the added current asset requirement is provided by growth in inventory, which
often results in what type of funds?
arranged financing
spontaneous financing
plowback funding
retained earnings - CORRECT ANSWER✅✅spontaneous financing
Which of the following job functions would most likely occur within the Treasury Department of a firm?I.
Cash managementII. Liquidity forecastingIII. Cost accountingIV. Analysis of merger and acquisition
opportunities
I and III
I and II
, III and IV
I and IV
I only - CORRECT ANSWER✅✅I and II
A firm that is unable to pay its suppliers on time would best be characterized as:
Illiquid
Solvent
Liquid
Unprofitable - CORRECT ANSWER✅✅Illiquid
The current economic crisis has _________________ interest in short-term financial management.
increased
had no effect on
too soon to know for sure
decreased - CORRECT ANSWER✅✅Increased
All else constant, an increase in receivables will have what effect on operating cash flow?
It depends
No effect on operating cash flow
Decrease in operating cash flow
Increase in operating cash flow - CORRECT ANSWER✅✅Decrease in operating cash flow
Based on the following information, calculate the Cash Conversion Cycle.
Days Inventory Held = 30 days
Days Sales Outstanding = 55 days
Days Payables Outstanding = 45 days - CORRECT ANSWER✅✅40
Use the following information to determine the firm's total ending cash and equivalents:
A successful firm manages its operations from:
a profit perspective
a cash flow perspective
a sales increase perspective
2 and 3
2 only
1 and 2
1 only
1 and 3 - CORRECT ANSWER✅✅1 and 2
A shorter cash conversion cycle generally implies a(n) ___________ in firm liquidity.
Worsening
Cannot be determined from this information
Improvement
No change - CORRECT ANSWER✅✅Improvement
As sales grow, some of the added current asset requirement is provided by growth in inventory, which
often results in what type of funds?
arranged financing
spontaneous financing
plowback funding
retained earnings - CORRECT ANSWER✅✅spontaneous financing
Which of the following job functions would most likely occur within the Treasury Department of a firm?I.
Cash managementII. Liquidity forecastingIII. Cost accountingIV. Analysis of merger and acquisition
opportunities
I and III
I and II
, III and IV
I and IV
I only - CORRECT ANSWER✅✅I and II
A firm that is unable to pay its suppliers on time would best be characterized as:
Illiquid
Solvent
Liquid
Unprofitable - CORRECT ANSWER✅✅Illiquid
The current economic crisis has _________________ interest in short-term financial management.
increased
had no effect on
too soon to know for sure
decreased - CORRECT ANSWER✅✅Increased
All else constant, an increase in receivables will have what effect on operating cash flow?
It depends
No effect on operating cash flow
Decrease in operating cash flow
Increase in operating cash flow - CORRECT ANSWER✅✅Decrease in operating cash flow
Based on the following information, calculate the Cash Conversion Cycle.
Days Inventory Held = 30 days
Days Sales Outstanding = 55 days
Days Payables Outstanding = 45 days - CORRECT ANSWER✅✅40
Use the following information to determine the firm's total ending cash and equivalents:
