2024 CFA1 CI M4 Revision

Cash Conversion Cycle (CCC) is inverse (negative) relationship with...?

• Days of inventory on hand (DOH)

• Days payable outstanding (DPO)

• Days sales outstanding (DSO)

Which method is one of 3 main ways to shorten cash conversion cycle (CCC)?

• Reduce days of inventory on hand

• Increase days sales outstanding

• Decrease days payable outstanding

Payment term a/b net c.

EAR = (1 + a/(1-a)) ^ (.../(b-c))

• 365

• 360

• c

• 1-b

Total working capital = Current assets − ...?

• Current liabilities

• Current liabilities (excluding short-term and current debt)

• Current liabilities (excluding cash & marketable securities)

Which is one of Secondary sources of liquidity?

• Cash and marketable securities

• Borrowings

• Cash flow from business

• • Selling assets

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

• A drag on liquidity

• Cash inflow

• Cash outflow

• A pull on liquidity

Which ratio is neither the largest nor the smallest?

• Current ratio

• Quick ratio

• Cash ratio

"Short-term debt usually involves fewer restrictions on business operations" is ...

• Pros of Aggressive Approach

• Cons of Aggressive Approach

• Pros of Moderate Approach

• Pros of Conservative Approach

Which is not the factor influence a company’s short-term borrowing strategy?

• Size

• Underlying assets

• Creditworthiness

• Reduced credit limits

(+) Cash flows from operations
(–) Investments in long-term assets

=...

• Net income
• Gross profit
• Free cash flow