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- Note payments reduce cash and are related to long-term debt. Do these facts automatically lead to their inclusion as elements of the financing section of the statement of cash flows? Explain.Which of the following is not a source of funds for immediate liquidity purposes? a. Proceeds from an IPO. b. Sale of liquid assets such as T-bills. c. Funds borrowed on the money market. d. Excess cash above regulatory reserve requirementsDecreasing the amount of liquid assets held for the purpose of meeting loan demands and deposit withdrawals and increasing the usage of deposit and nondeposit sources of funds paying market rates of interest is known as: a. leverage adjustment b. liability management c. liquidity management d. liquidity adjustment
- For Discounted Cash Flows to be useful, individual investors and companies must estimate a discount rate and cash flows correctly. Select one: a. True a. FalseWhich of the following statements is incorrect? Cash fund that is being held specifically for the retirement of long-term debts not maturing currently should be excluded form current assets and shown as a noncurrent investment Cash and cash equivalents is always presented as the first line item in the statement of financial position Investments that can be liquidated at once and with little risk of loss of principal may be classified as cash equivalent and included in the caption "Cash and Cash equivalents" Cash that is restricted and not available for use within one year from the end of reporting period should be included in noncurrent assetsLiquidity means having access to ready cash, including savings and credit, to cover unexpected expenses. In managing your liquidity, you must consider the following: management deals with the decisions about how much credit you need to support your spending and which sources of credit to use. management deals with deciding how much money to retain in liquid form and how to allocate the funds among short-term investment instruments. A Credit; Money B Cash; Debit C Money; Credit D Credit; Debit Debit; Credit
- Liquidity means that the firm has adequate cash to pay bills as and when they fall due Select one: a. False b. TrueMultiple choice: 1. Too large an investment in fixed capital may leave too little money for A. Working capital B. Settlements C. Compliance D. Requirements 2. Circulating capital A. Cash on hand B. Working capital C. Net balances D. Cash disbursementFinancial liabilities deliver cash. True False
- Which of the following transactions would result in an increase in capital employed? A. Paying a trade payable in cash B. Writing off a bad debt C. Purchasing on credit D. Repaying a loan E. Selling inventory at a profit F. Increasing the bank overdraft to purchase a non - current assetMultiple choice: 1. If you sell on credit, your cash inflow depends very much on the A. Cash sales B. Agreements or unsecured accounts C. Collection of AR D. Age of receivables 2. Initial investment of the owner A. Fixed capital B. Working capital C. Capital structure D. Equity capitalWhich of the following returns is consistent with contractual cash flows that are SPPI? Return for passage of time. Return for the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Return for the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Return for amounts to cover expenses and a profit margin. Group of answer choices I, II and III only I and IV only I, II, III and IV II and III only