Questions from Financial Management

Q: “The objective of the firm’s credit and collection policies should be

“The objective of the firm’s credit and collection policies should be to minimize its bad-debt losses.” Do you agree or disagree with this statement? Explain.

Q: Discuss how each of the following factors would tend to affect a

Discuss how each of the following factors would tend to affect a firm’s credit extension policies: a. A shortage of working capital b. An increase in output to the point where the firm is operating a...

Q: Describe the benefits of holding the following: a. Raw

Describe the benefits of holding the following: a. Raw materials inventories b. Work-in-process inventories c. Finished goods inventories

Q: Describe the components of carrying costs.

Describe the components of carrying costs.

Q: How do ordering costs for items purchased externally differ from ordering costs

How do ordering costs for items purchased externally differ from ordering costs for items manufactured internally within the firm?

Q: Describe the nature of stockout costs associated with a stockout in the

Describe the nature of stockout costs associated with a stockout in the following: a. Raw materials inventories b. Work-in-process inventories c. Finished goods inventories

Q: What is ABC inventory classification? How can this method be useful

What is ABC inventory classification? How can this method be useful to a business?

Q: What is a tax-free merger?

What is a tax-free merger?

Q: Describe the assumptions underlying the basic EOQ model.

Describe the assumptions underlying the basic EOQ model.

Q: In general terms, describe how to deal with each of the

In general terms, describe how to deal with each of the following conditions when determining the optimal inventory level: a. Constant (nonzero) replenishment lead time known with certainty b. Deman...