2024 CFAI CI M4

The higher ..., the lower Cash Conversion Cycle.

• Days of inventory on hand (DOH)

• Days sales outstanding (DSO)

• Days payable outstanding (DPO)

... indicates the amount of time that elapses from the point when a company invests in working capital until the point at which the company collects cash

• Cash conversion cycle

• Days of inventory on hand

• Days sales outstanding

• Days payable outstanding

How many main ways to shorten CCC?

• 2

• 3

• 4

• 5

Supplier offers payment term: 3/20 net 30. The payment is due within ... days?

• 20

• 30

• 10 = 30-20

Receivables turnover = Revenue/...

• Average Receivables

• Receivable at year N

• Receivable at year N-1

• Receivable at year N+1

How many groups of sources of liquidity?

• 2: internal & external

• 2: primary & secondary

• 3: internal, external, legal

• 3: primary, secondary, optional

How many learning objectives in Module 4?

• 2

• 3

• 4

• 5

Which liquidity ratio is the largest?

• Current ratio

• Quick ratio

• Cash ratio

... occurs when there is a delay in cash coming into the company, creating pressure from the decreased available funds

• A drag on liquidity

• A pull on liquidity

Factors influence a company’s short-term borrowing strategy exclude:

• Creditworthiness

• Legal considerations

• Underlying assets

• Conservatism