XYZ Corporation is presently a short-term borrower and uses a revolving line of credit with an interest rate of 7%. The Treasurer would like to reduce interest expense and increase liquidity without renegotiating the line of credit. Which of the following projects should the Treasurer support in order to achieve this objective as quickly as possible?

• A.Purchasing is trying to extend terms from net 30 to net 60 with one of their primary vendors. The vendor will agree if XYZ concentrates purchases with them.
• B.Store operations believes that an increase in inventory levels will raise sales as the corporation eventually becomes known for its wide selection.
• C.Accounts receivable is spending capital to improve its collection system. With the faster collections that will result, it anticipates recovering the outflows over a two-year period.
• D.One large store is being remodeled. When complete, it should generate sufficient additional sales within one year to cover the capital expenditure and produce a positive return on investment.

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The term "collection float" is defined as the delay between the time the payor:

• A.mails the check and the check is charged to the payor's account.
• B.prepares the check and the payee deposits the check.
• C.mails the check and the payee deposits the check.
• D.mails the check and the payee receives the available funds.

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BF Company, a manufacturer of food products, reported financial information shown in the Exhibit for the end of the year. BF Company is subject to covenants in its commercial paper program. It is in compliance with which of the following?

• A.Minimum working capital of $10,000
• B.Maximum dividends of 50% of net income
• C.Maximum long-term debt to capital of 52.5%
• D.Minimum cash flow to total debt of 45%

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Which of the following is MOST LIKELY to have a significant impact on the financial condition of an organization?

• A.Tax-deferred annuities
• B.401(k) plans
• C.Defined benefit pension plans
• D.Defined contribution pension plans

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A deck furniture supply company maintains a large inventory during the summer sales season. One of the PRIMARY benefits of this approach is that the company avoids which of the following costs?

• A.Stock-out
• B.Opportunity
• C.Holding
• D.Order

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