Question

In: Accounting

True or False In the management of cash and marketable securities, the primary concern is profitability....

  1. True or False
  1. In the management of cash and marketable securities, the primary concern is profitability.
  2. For most modern corporations, the more cash they have, the better off they are.
  3. Minimizing cash balances can improve overall corporate profitability.
  4. For most firms, the primary motive for holding cash is the transaction motive.
  5. Cash balances are usually determined by the amount of cash flowing through the firm on a yearly basis.
  6. A primary goal of cash management is to insure that the inflows and outflows of cash are synchronized.
  7. It is possible for companies to operate with negative cash balances on their books.
  8. If a firm averages $2,000 in daily credit sales and offers 60-day terms, the average accounts receivable balance will be $120,000.
  9. When a potential customer has a mediocre credit history, a firm should never consider allowing them to become a customer.
  10. If a company would like to reduce their average collection period, they can either offer a cash discount or increase their net terms.

Solutions

Expert Solution

In the management of cash and marketable securities, the primary concern is profitability.

False

For most modern corporations, the more cash they have, the better off they are.

False

Minimizing cash balances can improve overall corporate profitability.

True

For most firms, the primary motive for holding cash is the transaction motive.

True

Cash balances are usually determined by the amount of cash flowing through the firm on a yearly basis.

False

A primary goal of cash management is to insure that the inflows and outflows of cash are synchronized.

True

It is possible for companies to operate with negative cash balances on their books.

True
If a firm averages $2,000 in daily credit sales and offers 60-day terms, the average accounts receivable balance will be $120,000. True

When a potential customer has a mediocre credit history, a firm should never consider allowing them to become a customer.

False

If a company would like to reduce their average collection period, they can either offer a cash discount or increase their net terms.

True

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