MGMT 340 T3 Chapter 8 – Flashcards

What factors can drastically affect a company's cash flow? Select one: a. Increased competition b. Economic swings c. Normal seasonal variations d. All of these

Barter offers business owners the benefit of ________. Select one: a. buying materials, equipment, and supplies without spending valuable cash on them b. transforming slow-moving inventory into much-needed goods and services c. "paying" for goods and services at wholesale cost and getting credit for retail price d. All of these

Which of the following is not a step in creating a cash budget? Select one: a. Forecasting cash receipts. b. Determining an adequate minimum cash balance. c. Forecasting cash disbursements. d. Forecasting profits.

The fact that the cash budget illustrates the flow of cash in a business helps the owner to ________. Select one: a. track the effects of depreciation and bad debts b. get a seasonal line of credit rather than an annual line of credit c. accelerate accounts payable payments d. slow accounts receivable payments

The first step in managing cash more effectively is ________. Select one: a. understanding the company's cash flow cycle b. having an adequate cash reserve for emergency expenditures c. speeding up payment of accounts receivable d. rapid payment of accounts payable

An important source of credit information that collects information on small businesses that other reporting services ignore is ________. Select one: a. National Association of Small Business Owners b. National Association of Credit Management c. Dun & Bradstreet d. TRW

A collection agency typically takes ________ percent of the amounts they collect on past due accounts. Select one: a. 25 to 30 b. 10 to 20 c. 30 to 50 d. 5 to 10

Which of the following inventory management techniques would help a business owner make the best use of his company's cash? Select one: a. Avoid overbuying inventory. b. Schedule inventory deliveries at the latest possible date. c. Purchase goods from the fastest suppliers who can meet quality standards to keep inventory levels low. d. All of these

Leasing allows business owners to forecast cash flows more ________ because lease payments are ________ amounts paid over a particular time period. Select one: a. accurately; variable b. often; fixed c. accurately; fixed d. often; variable

Stick to what you are good at and ________ everything else" is an approach to reduce overhead costs. Select one: a. make b. leverage c. sell d. outsource

A cash budget reveals important clues about how well a company ________. Select one: a. balances its accounts receivable and accounts payable b. controls inventory c. finances its growth d. All of these

It is recommended that new business owners estimate cash disbursements as best they can and then add on another ________ percent. Select one: a. 25-35 b. 5-10 c. 10-25 d. 3-4

More companies fail for the lack of ________ than for the lack of ________. Select one: a. profit; cash b. net revenue; gross revenue c. cash; profit d. vision; profit

Which of the following is true about inventory management for the small business owner? Select one: a. Most small business owners have turned to technology and computer spreadsheets to achieve maximum efficiency in managing it. b. Inventory yields a return of about 25 percent for manufacturing firms but nothing for service companies. c. Inventory is the largest capital investment for most businesses, but few owners use any formal means for managing it. d. Inventory is generally highly liquid and can be easily mortgaged to a bank for immediate cash if needed.

An effective approach to successful collections includes ________. Select one: a. waiting to invoice and communicate with the customer once a payment problem clearly exists b. an abrupt, in-your-face style of communication once a payment is late c. timely, well-communicated payment expectations with well-documented records d. setting up an automated collection system to generate "Past Due" notices that does not require personal intervention

________ small businesses take the time to conduct a credit check. Select one: a. All b. Most c. Few d. None of these