In order to increase sales, the sales manager of your firm is proposing to offer

Question

In order to increase sales, the sales manager of your firm is proposing to offer 90 day credit terms rather than 60 day credit terms to customers. As a financial manager which of the following would be one of your primary concerns should your firm make this change to credit terms?

Select one:

a. How you would invest excess cash that is created by the change to credit terms.

b. As receivable collections begin to slow, how much of a negative impact will this change have on the firm's cash on hand.

c. This change would have no effect on the firm's cash position; therefore there is no need to be concerned.

d. The effect this change would have on taxable income.

You are a financial manager for a large Fortune 500 firm, typically the most important financial market for you to follow would be:

Select one:

a. The Money Market

b. The Stock Market

c. The Treasury Market

d. The IPO Market

Ford Motor Company plans to sell stock to build a new plant, the sale of stock would be considered a(n):

Select one:

a. Primary market transaction

b. Secondary market transaction

c. Initial Public Offering

d. Exchange of physical assets.

Explanation / Answer

1) In order to increase sales, the sales manager of your firm is proposing to offer 90 day credit terms rather than 60 day credit terms to customers. As a financial manager which of the following would be one of your primary concerns should your firm make this change to credit terms?

Answer: option B = As receivable collections begin to slow, how much of a negative impact will this change have on the firm's cash on hand.

2) You are a financial manager for a large Fortune 500 firm, typically the most important financial market for you to follow would be: option B = The Stock Market

The next best alternative would be option D = The IPO Market

3) Ford Motor Company plans to sell stock to build a new plant, the sale of stock would be considered a(n): option A = Primary market transaction

The next best alternative would be option C = Initial public offering.

I hope my solution solves your query.

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