Financial analysis

For a transportation firm, which ratio gives a measure of the source of funds with which property is obtained?

• Long-term debt to operating property

• Operating

• Operating revenue to operating property

• Per mile-per person-per ton

• Return on equity

For a utility, the ratio that is basically an operating asset turnover ratio is

• Operating revenue to operating property

• Percent earned on operating property

• Operating ratio

• Funded debt to operating property

• Return on assets

The length of time between the purchase of inventory and the receipt of cash from the sale of that inventory is called the:

• Inventory period

• Operating cycle

• Accounts receivable period

• Accounts payable period

• Cash cycle

Which one of the following increases cash?

• Accepting credit from a supplier

• Purchasing inventory

• Making a payment on a bank loan.

• Purchasing new machinery.

• Granting credit to a customer

Company A has sales of $387,000, average accounts receivable of $28,600 and average accounts payable of $32,800. The cost of goods sold is equivalent to 79 percent of sales. How long does it take The Company A to pay its suppliers?

• 30.94 days

• 32.38 days

• 39.16 days

• 35.89 days

• 26.97 days

BM company regularly issues short-term debt to finance its daily operations. Suddenly, the credit markets froze and no funds were available for borrowing. Fortunately, the firm had some cash reserves saved that it was able to use to fund its operations until additional credit was available. The need to retain cash for situations such as this is which one of the following motives for holding cash?

• Speculative

• Float

• Compensating

• Precautionary

• Transaction

Which one of the following statements is correct?

• Net float decreases every time a firm issues a check to pay one of its suppliers.

• A positive net float indicates that collection float exceeds disbursements float

• Firms prefer a zero net float over a positive net float

• Net float is equal to collection float minus disbursement float.

• Net float is equal to a firm's available balance minus its book balance.

Money market securities have which of the following characteristics?

• Short maturity, low risk, low liquidity.

• Low default risk, low liquidity, low return.

• High return, high liquidity, low risk.

• High liquidity, low risk, low return.

• Long maturity, low risk, high return

The Miller-Orr model:

• Advocates investing an amount described as (U* - C) in marketable securities when the cash balance reaches U*.

• Supports the argument that the target cash balance declines as order costs increase.

• Bases the optimal level of cash solely on the opportunity costs of holding cash.

• Requires that marketable securities be sold whenever the cash balance falls below the target level.

• Recommends selling securities in an amount equal to (U* - C) when the cash balance reaches L

All but which of the following would be a representative asset of a bank?

• Investment securities

• Loans

• Equipment

• Cash on hand

• Savings accounts