Which of the Following Statements Best Describes Cash Management

question 63

Multiple Choice

Which of the following statements best describes cash management?

• A) A cash management system that minimizes collections float and maximizes disbursement float is better than one with higher collections float and lower disbursement float.
• B) A cash management system that maximizes collections float and minimizes disbursement float is better than one with lower collections float and higher disbursement float.
• C) The use of a lockbox is designed to minimize cash theft losses in retail stores. If the cost of the lockbox is less than theft losses saved, then the lockbox should be installed.
• D) Other things held constant, a firm will need an identical line of credit regardless of whether it must pay its bills by the 5th of each month or pay its bills due uniformly during the month.

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Definitions:

Issuance Size

Refers to the total amount of securities, such as bonds or stocks, that an entity offers to the public for sale.

Venture Capital

Financing for new, often high-risk ventures.

Ownership

The act, state, or right of possessing something.

Financing Condition

A provision that stipulates specific financial conditions that must be met for a transaction to proceed.