QUIZ NO: 06Business FinanceACC 501-WINTER 2016Max Marks: 10 Marks obtained:Due date: Students must s

QUIZ NO: 06Business FinanceACC 501-WINTER 2016Max Marks: 10 Marks obtained:Due date: Students must submit their quizzes before 12 O’ clock mid night on4 March 2016Note: Highlight the correct answer, out of the four choices given for each question. 1. The average time between purchasing or acquiring inventory and receiving cash proceeds from its sale is called ————–.a) Operating Cycleb) Cash Cyclec) Receivable periodd) Inventory period2. Which of the following does not affect cash cycle of a company?a) Inventory periodb) Accounts receivable periodc) Accounts payable turnoverd) None of the given option3. Mr.Munir purchased goods of Rs.100,000 on June01, 2006 from Zeeshan and brothers on credit terms of 3/10, net 30. On June 09 Mr. Munir decided to make payment to Zeeshan and brothers. How much he would pay to Zeeshan and brothers.a) 100,000b) 97,000c) 103,000d) 50,0004. A firm has cash cycle of 100 days. It has an inventory turnover of 5 and receivable turnover of 2. What would be its accounts payable turn over?a) 3.347 approximatelyb) 5.347 approximatelyc) 2.347 approximatelyd) 6.253 approximately5. During the financial year 2005-2006 ended on June 30, the cash cycle of Climax company was 150 days, and its payable turnover was 5. What was the operating cycle of the company during 2005-2006?a) 234 daysb) 223 daysc) 245 daysd) 230 days6. Which of the following is the cheapest source of financing available to a firm?a) Bank loanb) Commercial papersc) Trade creditd) None of the given options.7. Which of the following illustrates the use of a hedging (or matching) approach to financing?a) Short-term assets financed with long-term liabilities.b) Permanent working capital financed with long-term liabilities.c) Short-term assets financed with equity.d) All assets financed with a 50 percent equity, 50 percent long-term debt mixture8. ————— is an incentive offered by a seller to encourage a buyer to pay within a stipulated time.a) Cash discountb) Quantity discountc) Float discountd) All of the given options9. If a firm has a net float less than zero, then which of the following statements is true about the firm.a) The firm’s disbursement float is less than its collection float.b) The firm’s collection float is equal to zero.c) The firm’s collection float is less than its disbursement float.d) None of the given options.10. Financing a long-lived asset with short-term financing would bea) An example of “moderate risk — moderate (potential) profitability” asset financing.b) An example of “low risk — low (potential) profitability” asset financing.c) An example of “high risk — high (potential) profitability” asset financing.d) An example of the “hedging approach” to financing

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