1.With respect to inventory management,:

A)   a decrease in a firm’s inventory turnover means inventory management is of poor quality.

B)   a decrease in a firm’s days of inventory on hand indicates better inventory management and can lead to increased profits.

C)   a firm with inventory turnover higher than the industry average can be expected to have better profitability as a result.

D)   an increase in days of inventory on hand can be the result of either good or poor inventory management.

2.A result that is most likely to give a financial manager concern that his firm’s credit policy may have become too lenient is:

A)   inventory turnover has decreased considerably.

B)   accounts receivable as a percentage of sales has decreased.

C)   receivables turnover has increased significantly.

D)   weighted average collection period has increased.

3.Which of the following strategies is most likely to be considered good payables management?

A)   Paying trade invoices on the day they arrive.

B)   Paying invoices after the discount period but prior to their due date.

C)   Taking trade discounts only if the firm’s annual return on short-term investments is less than the discount percentage.

D)   Paying invoices on the last possible day to still get the supplier’s discount for early payment.

答案和详解如下：

1.With respect to inventory management,:

A)   a decrease in a firm’s inventory turnover means inventory management is of poor quality.

B)   a decrease in a firm’s days of inventory on hand indicates better inventory management and can lead to increased profits.

C)   a firm with inventory turnover higher than the industry average can be expected to have better profitability as a result.

D)   an increase in days of inventory on hand can be the result of either good or poor inventory management.

The correct answer was D)

An increase in inventory could indicate poor sales and an accumulation of obsolete items or could be the result of a conscious effort to have adequate supplies to avoid losses from not having items to satisfy customer orders (stock outs). Higher-than-average inventory turnover could indicate better inventory management or could indicate that a less than optimal inventory is being maintained by the company.

2.A result that is most likely to give a financial manager concern that his firm’s credit policy may have become too lenient is:

A)   inventory turnover has decreased considerably.

B)   accounts receivable as a percentage of sales has decreased.

C)   receivables turnover has increased significantly.

D)   weighted average collection period has increased.

The correct answer was D)

The weighted average collection period is the average number of days it takes to collect a dollar of receivables. A credit policy that is too lenient will allow sales to customers that tend to pay late(r). A decreased percentage of sales made on credit or an increase in the receivables turnover ratio might result from more strict credit terms. Inventory turnover is not directly affected by credit terms, only though the effect of credit terms on overall sales.

3.Which of the following strategies is most likely to be considered good payables management?

A)   Paying trade invoices on the day they arrive.

B)   Paying invoices after the discount period but prior to their due date.

C)   Taking trade discounts only if the firm’s annual return on short-term investments is less than the discount percentage.

D)   Paying invoices on the last possible day to still get the supplier’s discount for early payment.

The correct answer was D)

Paying invoices on the last day to get a discount (for early payment) ifs often the most advantageous strategy for a firm. If the annualized percentage cost of not taking advantage of the discount is less than the firm’s short-term cost of funds, it would be advantageous to pay on the due date. Paying prior to the discount cut-off date or prior to the due date sacrifices interest income for no advantage.

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