Scribd
Upload
37 views

Financial Management Assignment To Be Submitted Before or On 10/10/2012 E.C I. Write True If The Statement Is True Otherwise False

1. The document contains 20 multiple choice questions about financial management concepts related to inventory, accounts receivables, and credit policies. 2. The questions cover topics such as determining optimal inventory levels, economic order quantity, characteristics of accounts receivables, factors affecting a firm's investment in receivables, and costs associated with inventory ordering. 3. The respondent is asked to indicate whether statements are true or false, choose the correct answer from options given, and identify statements that are not true.

Uploaded by

YewulsewYitbarek
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
37 views

Financial Management Assignment To Be Submitted Before or On 10/10/2012 E.C I. Write True If The Statement Is True Otherwise False

1. The document contains 20 multiple choice questions about financial management concepts related to inventory, accounts receivables, and credit policies. 2. The questions cover topics such as determining optimal inventory levels, economic order quantity, characteristics of accounts receivables, factors affecting a firm's investment in receivables, and costs associated with inventory ordering. 3. The respondent is asked to indicate whether statements are true or false, choose the correct answer from options given, and identify statements that are not true.

Uploaded by

YewulsewYitbarek
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

Financial Management Assignment To be submitted before or on 10/10/2012 E.

I. Write True if the statement is True otherwise False


1. Maintaining large number of inventories increases investment in current assets but decreases
associated cost with maintenance of inventories and vice-versa.
2. Determination of optimum inventories level or quality of inventory to maintain depends on the
trades off between inventory carrying cost and inventory ordering costs.
3. Economic order quantity is that level of inventory, which maximizes that total costs and profit of
an organization.
4. A reduction in the investment in accounts receivables reduces associated costs but also decreases
profitability of firms.
5. An optimum credit policy is that one maximizes value of the firm, by minimizing the associated
costs of credit sales and providing incremental revenue to the business.’
6. Ordering costs of inventory is also called as purchasing costs of inventory.
7. Any established credit policy has to be evaluated before implementation.
8. Granting credit to the customers is the essential marketing principle, which expands the volume of
sales for every business unit.
9. The optimum size of inventory is that inventory where inventory carrying cost will be equal to the
inventory ordering costs.
10. Increase in volume of inventories decrease carrying cost and vice-versa.
II. Choose the correct answer from the given alternatives
11. Which one of the following is correct about optimum credit policy?
A. Is the point where operating profits are maximum and firms total cost on investment in
receivables are minimum
B. the point of intersection of profitability slope and liquidity slope
C. the incremental return is equal to incremental costs of the business.
D. Is the point where total opportunity of lost contribution and credit administration cost and bad
debts losses are minimum. E. all
12. The types of a business inventory that are converted into finished goods through conversion
process (manufacturing process) as basic inputs are
A. Raw materials inventories B. finished goods
C. work-in progress inventories D. none
13. The following are characteristics of receivables arising out of credit sales except
A. involvement of risk in collection
B. collection at latter period do have lower economic value
C. problems of non-collection D. none
14. One of the following is true about full service none resource factoring
A. is the method under which book debts are purchased by the factor assuming 100% credit risk
B. the full amount of invoices have to be paid to the client in the event of debt becoming bad.
C. client is not protected against the risk of bad debts
D. factor does not provide any indemnity against book debts on which a customer subsequently
defaults
E. the client will have to refund the money in case of non-collection of book debts. F. A & B
15. The following is/are aim objectives of an efficient inventory management except
A. maintain sufficient quantities in inventories in period of short period supply and un-anticipated
price changes
B. ensure a continuous supply of materials to facilitate un-interrupted production.
C. maintain sufficient of finished goods inventories for smooth sales operations and efficient
customer services
D. minimizing the carrying cost of inventories
16. Which one of the following is not true about receivables?
A. it substitute a substantial portion in the current assets of a business
B. the receivables investment represents in credit sales that increase profitability
C. investment in receivables results in additional investment costs. D. all
17. Any firm’s investment in accounts receivables depends all of the following except
A. the volume of credit sales B. amount of profit raised
C. risk involved in collection D. collection period
18. The duration of credit (in time ) and terms of payment (discount) is specifies by the customer in
A. credit standards B. credit terms C. collection efforts D. sales volume
19. Which one of the following is not cost of ordering inventory?
A. material requisition cost B. receiving cost C. inspecting cost D. storage cost
20. Which one of the following is not true?
A. incremental revenue = ∆ sale × net income ratio
B. incremental expense/ bad debts = ∆ sale × bad debt ratio (percentage of bad debts)
C. incremental revenue = sale × net income ratio D. all except C

You might also like