brick shots Flashcards
(20 cards)
when factoring AR, where are the following costs applied to:
fee
interest
fee on entire AR amount
interest on advanced AR
the reorder point is:
safety stock + sales during lead time
what is the difference between a flowchart and a dataflow diagram?
flowchart shows logical and physical (manual v. automated) flow of information
dataflow diagram only shows logical flow
what does it mean to have a CONSERVATIVE working capital ratio?
have more cash to pay off short term debts
more liquid
less profitable
what does it mean to have an AGGRESSIVE working capital ratio?
cash is spent on fixed assets
less liquid
more profitable
why would refinancing a short term payable with long term debt increase working capital ratio?
current liabilities would decrease, and cash would remain unchanged. so working capital would increase.
what is economic order quantity?
square root of: 2 sales purchase order costs / carrying cost
a preferred stock is sold for $101, has a face value of $100, underwriting fees of $5 and a $10 dividend. tax rate is 40%. how much is the cost of capital for PS?
10 / 96
101-5 = 96
tax rate is a distractor because PS are tax free
what is the operating cycle?
inventory conversion + AR collection
what type of options should be bought for:
payables
receivables
call
put
what are inherent limitations to internal control?
human failure
collusion
management override
biased judgements
invest $10,000 at 8% compounded annually. what is the interest expense in year 2?
$864
year 1: $10,000 * 8%
year 2: 10,800 * 8%
when a foreign currency inflates, how does that impact domestic currency?
demand for domestic currency increases because more purchasing power
PEG formula
P0/E0 /(g*100)
write out the present value equation?
annual cash inflows * PVOA = PV
which inventory approach should be used when minimize total inventory costs by equating carrying cost with restocking cost?
economic order quantity
what do ordering costs consist of in EOQ?
production set up costs
why does event identification occur after establishing organizational objectives?
risks are identified relative to the objectives set
why doesn’t NPV provide a true rate of return?
NPV indicates whether or not the investment is going to earn the hurdle rate or not
why isn’t inadequate supervision a reason for price variance?
inadequate supervision is related to managing employees, materials and machines that impacts efficiency and usage
