In the Context of Managing Cash in an Organization,which of the Following

question 64

Multiple Choice

In the context of managing cash in an organization,which of the following is true?

• A)Business organizations make money from idle cash.
• B)Corporate checking accounts typically earn interest.
• C)Money managers try to keep as much cash in their hands as possible.
• D)To manage a firm's cash,companies try to speed up cash collections from customers.
• E)Managers measure cash flow as the amount of cash the firm spends in a period of one year.

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Definitions:

Accounts Receivable Period

Accounts Receivable Period is the average number of days it takes for a company to collect payment from its customers after a sale has been made.

Cash Cycle

The period of time it takes for a business to convert its investments in inventory and other resources into cash flows from sales.

Inventory Turnover Rate

Inventory turnover rate measures how often a company sells and replaces its stock of goods during a certain period, indicating the efficiency of inventory management.

Collection Period

A financial metric that indicates the average number of days it takes a company to collect payments from its credit sales, essentially a detailed aspect of collection time with focus on receivables.