Quiz Ch 19 – T/F Current Liabilities as a Source of Cash
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
True or false: The firm generates cash through the growth of current liabilities.
True or false: The firm generates cash through the growth of current liabilities.
True or false: When a firm’s customers take two weeks to pay their bills on average, about half of each month’s bills are postponed to the following month.
True or false: Selling $5 million of marketable securities results in a $5 million cash increase.
True or false: When a firm sells marketable securities, its working capital increases, but its cash holdings remain unchanged.
True or false: When a company takes a $1 million short-term loan and allocates the funds to inventory investment, its cash position remains unaltered.
True or false: Financial managers often mention that they aim to align the maturities of the company’s assets and liabilities when asked about their primary reason for selecting short-term debt over long-term debt.
True or false: For taxpaying firms, holdings of marketable securities are, at worst, zero NPV investments.
True or false: Cash budgeting models aim for improved earnings forecasts.
True or false: Tax inversion relates to the adverse tax shield caused by a firm’s securities investment.
True or false: Companies with excess cash can employ it to boost dividends or repurchase securities.