Which of the Following Statements Is Most Correct

question 18

Multiple Choice

Which of the following statements is most correct?

• A) A good cash management system would minimize disbursement float and maximize collections float.
• B) If a firm begins to use a well-designed lockbox system, this will reduce its customers' net float.
• C) In the early 1980's, the prime interest rate hit a high of 21 percent. In 1995 the prime rate was considerably lower. That sharp interest rate decline has increased firms' concerns about the efficiency of their cash management programs.
• D) If a firm can get its customers to permit it to pay by wire transfers rather than having to write checks, this will increase its net float and thus reduce its required cash balances.
• E) A firm which has such an efficient cash management system that it has positive net float can have a negative checkbook balance at most times and still not have its checks bounce.

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Definitions:

Gallons of Output

A measure of production volume, specifically the quantity of output produced or processed, quantified in gallons.

Gallons of Input

Gallons of input measure the volume of raw materials or substances used in a process, often relevant in industries like manufacturing or chemical processing.

Yield

The income return on an investment, expressed as a percentage of the investment’s cost or current value.

Applied Factory Overhead

The allocation of factory overhead costs to units produced, based on a predetermined rate or method.