Question 7

a). b).

c).

The primary reason a firm holds marketable securities is because they: O substitute for its long-term debt. o offer a place to temporarily invest cash balances to earn high rates of return. O are useful for managing credit sales. o can be used to help speed up collections of its accounts payable. O permit the firm to earn positive returns on cash that is not needed to pay bills in the current period. Which of the following statements about inventory management is correct? O The economic ordering quantity is the quantity at which the total cost of carrying (holding) inventory is minimized. O A firm should always order inventory in amounts sufficient to take advantage of quantity discounts. O Safety stock is additional inventory that a firm carries to guard against unexpected changes in sales. To most efficiently manage its inventory, a firm should not reorder raw materials until it has no products remaining in inventory. O Outsourcing is the practice of arranging for a supplier to deliver raw materials at the time they are needed in the production process. Which of the following statements about working capital management in multinational corporations is correct? O Multinational corporations can take advantage of the best interest rates available in the international financial markets by using global concentration banks. The primary reason foreign governments impose import or export quotas and tariffs is to ensure that multinational corporations are able to compete with domestic companies. O The political and legal environments in most foreign countries make it easier for multinational corporations than for domestic companies to collect defaulted credit accounts. O Many foreign governments provide multinational corporations that operate in their countries with subsidies to offset exchange rate changes that harm the foreign companies' profits. o Generally, a multinational company faces a lower threat of government expropriation than do domestic companies