Questions from Financial Management

Q: a. Which of the following working capital financing policies subjects the

a. Which of the following working capital financing policies subjects the firm to a greater risk? i. Financing permanent current assets with short-term debt ii. Financing fluctuating current assets...

Q: Define and discuss the function of collateral in short-term credit

Define and discuss the function of collateral in short-term credit arrangements.

Q: In a debt reorganization, explain the difference between a composition and

In a debt reorganization, explain the difference between a composition and an extension.

Q: How is the annual financing cost for a short-term financing

How is the annual financing cost for a short-term financing source calculated? How does the annual financing cost differ from the true annual percentage rate?

Q: Explain the difference between spontaneous and negotiated sources of short-term

Explain the difference between spontaneous and negotiated sources of short-term credit.

Q: Under what condition or conditions is trade credit not a “cost

Under what condition or conditions is trade credit not a “cost-free” source of funds to the firm?

Q: Define the following: a. Accrued expenses b.

Define the following: a. Accrued expenses b. Deferred income c. Prime rate d. Compensating balance e. Discounted loan f. Commitment fee

Q: Explain the differences between a line of credit and a revolving credit

Explain the differences between a line of credit and a revolving credit agreement

Q: What are some of the disadvantages of relying too heavily on commercial

What are some of the disadvantages of relying too heavily on commercial paper as a source of short-term credit?

Q: Explain the differences between pledging and factoring receivables.

Explain the differences between pledging and factoring receivables.