An objective of cash management is to
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A: Cash management is the process of collecting, processing, controlling, and investing an…
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A: Rather than Frank and Goyal (2009), we find that income instability has a huge adverse consequence…
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A: A factor, or considering organization, purchases other firms' records receivable. The factor…
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A: A short-term promissory note issued by largecorporations is a written agreement which is between the…
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A: The term direct deposit means the direct transfer of funds electronically from one bank account to…
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A: Debt financing is when a business borrows money with the intention of repaying it with interest at a…
Q: Factoring of accounts receivable typically is the highest cost method of short-term financing.; True…
A: Yes its true Accounts receivable (AR) financing is a type of financing arrangement in which a…
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A: Financial statements are like a fine perfume, to be sniffed but not swallowed.
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A: Answer- Yes its true! Marketable securities are liquid financial instruments that can be quickly…
Q: elivering cash or another financial asset.
A: Answer is - B
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A: Financial statements can be defined as records that give us an idea of how the business activities…
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A: Cash Transfer is a form of direct monetary payment to a specific person. Cash transfers include two…
Q: The FDIC traditionally protects depositors up to $250,000 per account. True or False True False
A: Correct Answer is True.
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A: It is less likely to assure the accounts payable at an interim date than accounts receivable because…
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A: Discounted cash flows Methods: Another strategy for registering expected paces of return is the…
Q: Brands such as because: a. These assets increase mental and physical availability O b. These assets…
A: Market based assets is an integral part of any company. As a consequence of this, many companies…
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A: Effective cash management requires cash planning, cash flow management, cash control, and…
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A: Definitions for the assertions: Existence or occurrence: This is a transaction assertion meaning…
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A: Liquidity and profitability trade-offs have turned into a vital issue among any organization.it is…
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A: When an enterprise buys debt from another enterprise, it is called factoring. It is in two kinds,…
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A: Liquid assets are assets that may be easily converted into cash or are in the form of cash. It helps…
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A: A cash flow hedge is a hedge of the exposure to variability in the cash flows of a specific asset or…
Q: Investment X offers to pay you $4,500 per year for nine years, whereas Investment Y offers to pay…
A: The timelines are: To find the PVA, we use the equation: PVA = C({1 – [1/(1 + r)]^t } / r )
Q: Explain the meaning of the term Annuities by providing examples
A: Annuities are financial products that enable people secure a steady stream of income even during…
Q: Why would a lender offer unsecured short-term loans when it could demand collateral?
A: There are two types of loans in businesses- Secured business loans, which need some collateral for…
Q: For a business firm, what type of activities does financial management involve?
A: Financial management is the process of planning, organizing, and monitoring financial resources.…
Q: Some of the cash flow elements are estimated in constant dollars, and othersare estimated in actual…
A: The answer is True.
Q: Define a Company. Explain its features and also explain advantages and disadvantages of forming a…
A: Define a Company. Explain its features and also explain advantages and disadvantages of forming a…
Q: A government company created an account for strategic purposes (to help in facing the…
A: ANSWER: Amount = A Interest rate = i n = number of years
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A: The correct option is a, that is debt with a maturity greater than one year. Long term debt…
Q: What are the concerns in cash management, and how do cash management ISs help financial managers?
A: The process of collecting and managing cash flow from a company's operating, investing and financial…
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A: Cash-balance plans The cash-balance plan refers to the pension plans where the employees’ account is…
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A: One of the important decisions which the financial manager has to take is to consider the concept of…
Q: Explain how factoring works. Of what benefit is factoring to a firm that sells its receivables?
A: When a company purchases debt from another company, it is known as factoring. It is of two types,…
Q: What is Cash and cash equivalents ?
A: Cash and cash equivalents are items listed on the company's balance sheet. They offer a high level…
Q: what accounting principle is observed in computing a depreciation? *
A: Accounting principles are the guidelines that companies must follow when writing any financial…
Q: A mutual fund that invest in a mix of equity and fixed income securities that provide current cash…
A: A mutual fund that invest in a mix of equity and fixed income securities that provide current cash…
Q: All cash flow elements are estimated in constant dollars. True or false?
A: True.
Q: Explain the concept and scope of Managerial Accounting together with its functions with example.
A: The management of the financial resources is an essential activity of an organization. Financial…
Q: All of the following are part of the current account EXCEPT ________.
A: In the Balance of Payments computation for a country, its current account balance includes trade…
Q: Anna bought a bond with a par value of $10,000 and a coupon rate of 8% at par. After a year, she was…
A: The annual income (interest or dividends) from an investment is divided by the security's current…
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- It is January 1 of year 0, and Merck is trying to determine whether to continue development of a new drug. The following information is relevant. You can assume that all cash flows occur at the ends of the respective years. Clinical trials (the trials where the drug is tested on humans) are equally likely to be completed in year 1 or 2. There is an 80% chance that clinical trials will succeed. If these trials fail, the FDA will not allow the drug to be marketed. The cost of clinical trials is assumed to follow a triangular distribution with best case 100 million, most likely case 150 million, and worst case 250 million. Clinical trial costs are incurred at the end of the year clinical trials are completed. If clinical trials succeed, the drug will be sold for five years, earning a profit of 6 per unit sold. If clinical trials succeed, a plant will be built during the same year trials are completed. The cost of the plant is assumed to follow a triangular distribution with best case 1 billion, most likely case 1.5 billion, and worst case 2.5 billion. The plant cost will be depreciated on a straight-line basis during the five years of sales. Sales begin the year after successful clinical trials. Of course, if the clinical trials fail, there are no sales. During the first year of sales, Merck believe sales will be between 100 million and 200 million units. Sales of 140 million units are assumed to be three times as likely as sales of 120 million units, and sales of 160 million units are assumed to be twice as likely as sales of 120 million units. Merck assumes that for years 2 to 5 that the drug is on the market, the growth rate will be the same each year. The annual growth in sales will be between 5% and 15%. There is a 25% chance that the annual growth will be 7% or less, a 50% chance that it will be 9% or less, and a 75% chance that it will be 12% or less. Cash flows are discounted 15% per year, and the tax rate is 40%. Use simulation to model Mercks situation. Based on the simulation output, would you recommend that Merck continue developing? Explain your reasoning. What are the three key drivers of the projects NPV? (Hint: The way the uncertainty about the first year sales is stated suggests using the General distribution, implemented with the RISKGENERAL function. Similarly, the way the uncertainty about the annual growth rate is stated suggests using the Cumul distribution, implemented with the RISKCUMUL function. Look these functions up in @RISKs online help.)aren Johnson, CFO for Raucous Roasters (RR), a specialty coffee manufacturer, is rethinking her company’s working capital policy considering a recent scare she faced when RR’s corporate banker, citing a nationwide credit crunch, balked at renewing RR’s line of credit. Had the line of credit not been renewed, RR would not have been able to make payroll, potentially forcing the company out of business. Although the line of credit was ultimately renewed, the scare has forced Johnson to examine carefully each component of RR’s working capital to make sure it is needed, with the goal of determining whether the line of credit can be eliminated entirely. In addition to (possibly) freeing RR from the need for a line of credit, Johnson is well aware that reducing working capital can also add value to a company by improving its EVA (Economic Value Added). In her corporate finance course Johnson learned that EVA is calculated by taking net operating profit after taxes (NOPAT) and then subtracting…In the context of capital budgeting, risk refers toSelect one: a.the chance that the internal rate of return will exceed the cost of capital b.the degree of variability of the initial investment. c.the degree of variability of the cash inflows. d.the chance that the net present value will be greater thanzero.
- Evaluate the following statements:S1. Any investment income of general borrowing is deducted from capitalizable borrowing cost.S2. If the asset is financed by specific borrowing but a portion is used for working capital purposes, the borrowing shall be treated as general borrowing in determining capitalizable borrowing cost. a.False, False b.False, True c.True, True d.True, FalseConsider the following balance sheet: Cash $70,000 Accounts receivable $30,000 Inventories $50,000 Net fixed assets $350,000 Total assets $500,000 Accounts payable $30,000 Long-term debt $20,000 Common stock $200,000 Retained earnings $250,000 Total liabilities and equity $500,000 Assume that the business uses $30,000 of its cash to pay salaries. Which of the following statements reflects the resulting balance sheet change?The residual dividend theory suggests that: a. Firms should pay dividends only if the net income is higher than firm capital needs b. Dividends should be paid if Net Income -Debt Ratio*Capital Budget is positive c. Dividend should be paid if Net Income - % Equity in Capital Structure*Capital Budget is greater than zero d. Dividends should be paid on the basis of a constant payout ratio e. Dividends should be paid if free cash flows to the firm are positive
- 1 a) Which of the following statements is correct? A. Firms that use large amounts of operating leverage will find that their EBIT will be more variable than firms that do not. B. If a 20% change in sales results in a 10% change in EBIT, we would say that the degree of operating leverage (DOL) is 2. C. The use of higher debt financing concentrates the firm’s business risk onto more shareholders, making the stock less risky. D. All the answers are correct. E. If a firm’s operating costs are all variable, then any variation in sales will be less than the variation in EBIT. ------------------------------------------------------------------------------------------------------------------------------------ 1 b)Which of the following statements is incorrect? A. We would say that a firm with the high variability of EBIT has high levels of business risk. B. If a firm is selling widgets for $30 per unit, while variable costs are $20 per unit and fixed costs total $100,000, then the firm must…Forrester and Cohen is a small accounting firm, managedby Joseph Cohen since the retirement in December of hispartner Brad Forrester. Cohen and his three CPAs can togetherbill 640 hours per month. When Cohen or another accountantbills more than 160 hours per month, he or she gets an additional"overtime" pay of$62.50 for each of the extra hours: this is aboveand beyond the $5,000 salary each draws during the month.(Cohen draws the same base pay as his employees.) Cohenstrongly discourages any CPA from working (billing) more than240 hours in any given month. The demand for billable hours forthe firm over the next 6 months is estimated below: Cohen has an agreement with Forrester, his former partner,to help out during the busy tax season, if needed, for an hourly feeof $125. Cohen will not even consider laying off one of his colleaguesin the case of a slow economy. He could, however,…Which of the following accounts increases the debit and decreases the credit? Give reasons with the examples. i. Liabilities, owner's equity and revenuesii. Revenues, liabilities, and assetsiii. Expenses, liabilities, and owner's equityiv. Assets and expenses
- Explain, why doesn't an estimated absolute covariance number tell the investor much about the relationship between the returns on the two assets.The company's bank won't lend it any more money than it already has, and investment bankers have said that debentures are out of the question. The treasurer has asked you to do some research and suggest a few ways in which bonds might be made attractive enough to allow the company to borrow. Please provide a detail explanation for numbers 1-4. 1. Explain how to secure the bonds with owned assets in great detial. In what ways does it make the bonds more attractive to allow the company to borrow? 2. What is the agreement to subordinate future debt? How does it make the bonds more attractive? 3. What does providing a restrictive indenture limiting the risk in future undertakings do? How does it make the bonds more attractive? Explain in great detail. 4. How does providing a sinking fund for principal repayment make the bonds more attractive? Explain in detail.I have a accounting firm and someone from real estate wants to invest and give my firm all her accounts but in return wants equal ownership of my firm, but i dont want to giver her equal ownership but wants her to invest in my firm , what are alternatives that i can offer her without giving her half ownership. Elaborate