1. What is float? What are its four basic components? Which of these components is the same from both a collection and a payment perspective?
2. What is a collection policy? What is the typical sequence of actions taken when by a firm when attempting to collect an overdue account?
3. What is the financial planning process? What is a strategic plan? Describe the roles that financial managers play with regard to strategic planning.
4. What does the word sustainable mean in sustainable growth model? In what ways can the sustainable growth model highlight conflicts between a firm's competing objectives?
5. What is the firm's goal in short-term investing? How does it use money market mutual funds? Describe some of the popular money market financial instruments in each of the following groups: U.S. Treasuries, federal agency issues, bank financial instruments, corporate obligations.
6. The owner of a hot dog cart purchases inventory with credit every morning and sells all of the inventory by 2 o'clock in the afternoon. The hot dogs an drinks are sold only for cash. Will the owner have a negative cash conversion cycle?
7. Why does it make sense to let the firm's cash balance or a short-term liability account serve as the plug figure in pro forma projections? Why not use gross fixed assets as the plug figure?
8. Why might pro forma statements and the equation for external funds required (EFR) yield different projections for a firm's financing needs?
9. Explain how slower inventory turnovers, slower receivables collections, or faster payments to suppliers would influence the numbers produced by a cash budget.