Quiz Management of Current Assets (FM)

A firm increases the risk of insolvency by keeping relatively large amounts of money tied up in marketable securities.

• True
• False

Near-cash assets consist of marketable securities and account receivable.

• True
• False

The industry in which a firm operates has relatively little effect on the relative amounts of transaction cash held

• True
• False

For many industries, accounts receivable comprisesnas much as 25% of total assets.

• True
• False

Speculative cash balance are held to take advantage of uncertain, profit-making opportunities.

• True
• False

Account Receivable variables under the control of the financial manager include level of credit sales, terms of credit sales and quality of credit customers.

• True
• False

One method used to monitor the collection of accounts receivable is ageing list of debtors.

• True
• False

The nature of a company business is an important factor in determining the level of credit sales.

• True
• False

Efficient collection of account receivable helps to determine both the profitability and liquidity of a firm.

• True
• False

The purpose of maintaining raw materials inventory is to integrate the purchasing and production functions.

• True
• False