Which of the following is not an objective of cash management?
a) Maximizing cash flows
b) Minimizing idle cash
c) Optimizing short-term investments
d) Maximizing credit sales
Answer: d) Maximizing credit sales
Cash management involves which of the following activities?
a) Cash budgeting and forecasting
b) Cash flow analysis
c) Accounts payable management
d) All of the above
Answer: d) All of the above
What is the primary goal of cash management?
a) Maximizing profit
b) Maximizing cash inflows
c) Minimizing cash outflows
d) Maintaining liquidity
Answer: d) Maintaining liquidity
Which of the following is an example of a cash inflow?
a) Payment to suppliers
b) Cash sales
c) Salary payment
d) Loan repayment
Answer: b) Cash sales
Cash management helps in:
a) Reducing the risk of insolvency
b) Maximizing shareholder wealth
c) Managing inventory levels
d) All of the above
Answer: d) All of the above
Which of the following is an effective cash management technique?
a) Delaying accounts payable
b) Holding excess inventory
c) Investing in long-term assets
d) Accelerating accounts receivable collection
Answer: d) Accelerating accounts receivable collection
Cash conversion cycle (CCC) measures:
a) The time taken to convert cash into inventory
b) The time taken to convert inventory into sales
c) The time taken to convert sales into cash
d) The time taken to convert accounts payable into cash
Answer: c) The time taken to convert sales into cash
Which of the following is a cash management strategy to deal with seasonal fluctuations in cash flows?
a) Shortening the credit period for customers
b) Delaying payments to suppliers
c) Reducing inventory levels
d) Allowing early payment discounts to customers
Answer: d) Allowing early payment discounts to customers
Which of the following is not a cash flow forecasting method?
a) Historical cash flow analysis
b) Ratio analysis
c) Trend analysis
d) Regression analysis
Answer: b) Ratio analysis
The objective of cash concentration is to:
a) Increase cash inflows
b) Optimize short-term investments
c) Centralize cash from multiple locations
d) Extend the accounts payable period
Answer: c) Centralize cash from multiple locations
Which of the following is a cash management technique to reduce the risk of theft and fraud?
a) Implementing a cash segregation policy
b) Increasing cash disbursements
c) Allowing unlimited access to cash reserves
d) Ignoring cash reconciliation procedures
Answer: a) Implementing a cash segregation policy
The cash conversion cycle is composed of which three components?
a) Accounts receivable period, inventory turnover period, and accounts payable period
b) Cash inflow period, cash outflow period, and cash holding period
c) Working capital turnover period, cash reconciliation period, and credit sales period
d) Cash forecasting period, cash investment period, and cash disbursement period
Answer: a) Accounts receivable period, inventory turnover period, and accounts payable period
Which of the following cash management techniques involves negotiating favorable payment terms with suppliers?
a) Cash pooling
b) Just-in-time inventory management
c) Vendor-managed inventory
d) Trade credit optimization
Answer: d) Trade credit optimization
What is the purpose of a cash budget?
a) To track cash inflows and outflows over a specific period
b) To analyze long-term investment opportunities
c) To estimate accounts payable amounts
d) To calculate inventory turnover ratios
Answer: a) To track cash inflows and outflows over a specific period
Which of the following is an advantage of maintaining an optimal cash balance?
a) Minimizing the need for cash forecasting
b) Maximizing short-term investment returns
c) Reducing the need for accounts receivable management
d) Eliminating the risk of cash shortages
Answer: d) Eliminating the risk of cash shortages
Cash management techniques focus on managing which type of cash flow?
a) Operating cash flow
b) Investing cash flow
c) Financing cash flow
d) All of the above
Answer: a) Operating cash flow
Which of the following is a cash management strategy to reduce idle cash?
a) Investing in long-term bonds
b) Holding excess inventory
c) Implementing an electronic funds transfer system
d) Extending the credit period for customers
Answer: c) Implementing an electronic funds transfer system
Which of the following is an example of an internal control measure in cash management?
a) Segregating cash handling and record-keeping duties
b) Delaying customer payments
c) Reducing the frequency of cash reconciliations
d) Increasing the credit period for suppliers
Answer: a) Segregating cash handling and record-keeping duties
Which of the following is a cash management technique to accelerate cash collections?
a) Offering discounts for early payment
b) Delaying depositing customer checks
c) Increasing credit sales periods
d) Allowing extended payment terms for customers
Answer: a) Offering discounts for early payment
Cash management aims to optimize the utilization of which financial resource?
a) Inventory
b) Fixed assets
c) Cash reserves
d) Accounts payable
Answer: c) Cash reserves
Which of the following is a cash management strategy to minimize cash outflows?
a) Delaying accounts receivable collection
b) Increasing inventory levels
c) Negotiating extended payment terms with suppliers
d) Decreasing credit sales
Answer: c) Negotiating extended payment terms with suppliers
Cash management techniques help in managing which of the following risks?
a) Liquidity risk
b) Market risk
c) Credit risk
d) All of the above
Answer: d) All of the above
Which of the following is an example of a cash management tool or software?
a) Cash flow statement
b) Balance sheet
c) Cash management system
d) Income statement
Answer: c) Cash management system
The cash conversion cycle measures the efficiency of a company’s management of which of the following?
a) Cash flows from financing activities
b) Cash flows from investing activities
c) Cash flows from operating activities
d) Cash flows from all activities
Answer: c) Cash flows from operating activities
Which of the following cash management techniques involves investing excess cash for short-term gains?
a) Cash pooling
b) Cash concentration
c) Cash flow forecasting
d) Cash investment optimization
Answer: d) Cash investment optimization
Which of the following is a cash management technique to improve cash flow forecasting accuracy?
a) Implementing cash segregation policies
b) Outsourcing cash reconciliation activities
c) Using historical cash flow data
d) Ignoring market trends
Answer: c) Using historical cash flow data
Which of the following is an advantage of using cash pooling?
a) Increased control over cash flows
b) Decreased need for cash forecasting
c) Reduced risk of fraud
d) Improved cash investment returns
Answer: a) Increased control over cash flows
Cash management aims to strike a balance between which two competing objectives?
a) Maximizing cash inflows and minimizing cash outflows
b) Maximizing liquidity and maximizing profitability
c) Maximizing credit sales and minimizing inventory levels
d) Maximizing short-term investments and minimizing long-term investments
Answer: b) Maximizing liquidity and maximizing profitability
Which of the following is a cash management technique to minimize the cost of managing cash?
a) Utilizing lockbox services
b) Delaying accounts payable payments
c) Increasing the frequency of cash reconciliations
d) Extending the credit period for customers
Answer: a) Utilizing lockbox services
Cash management plays a crucial role in supporting which of the following business functions?
a) Capital budgeting
b) Human resources management
c) Sales and marketing
d) All of the above
Answer: d) All of the above