2. Which of the following statements is FALSE? a. A portion of a firm's investment in...

50.1K

Verified Solution

Question

Finance

2. Which of the following statements is FALSE? a. A portion of afirm's investment in its accounts receivable and inventory istemporary and results from seasonal fluctuations in the firm'sbusiness or unanticipated shocks. b. In a perfect capital market,the choice of financing is irrelevant; thus how the firm chooses tofinance its short-term cash needs cannot affect value. c. Thematching principle indicates that the firm should finance permanentworking capital with short-term sources of funds. d. Following thematching principle should, in the long run, help minimize a firm'stransaction costs.
22. Which of the following would decrease a firm's cashconversion cycle? a. Increase the accounts receivable days b.Increase the accounts payable days c. Increase the cash days d.Increase the inventory days
31. MTN Enterprises, LTD. had sales of $154 million this yearand an average accounts receivable of $18 million per day. Itscredit terms specify “2/14 net 40.” Based on this information, howlong does it take MTN to collect on its sales (on average)? a. 8.5days b. 28 days c. 43 days d. 13 days

Answer & Explanation Solved by verified expert

3.6 Ratings (412 Votes)

2 The false statement is c he matching principle indicates that the firm should finance permanent working capital with shortterm sources of funds The matching principle See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

2. Which of the following statements is FALSE? a. A portion of afirm's investment in its accounts receivable and inventory istemporary and results from seasonal fluctuations in the firm'sbusiness or unanticipated shocks. b. In a perfect capital market,the choice of financing is irrelevant; thus how the firm chooses tofinance its short-term cash needs cannot affect value. c. Thematching principle indicates that the firm should finance permanentworking capital with short-term sources of funds. d. Following thematching principle should, in the long run, help minimize a firm'stransaction costs.22. Which of the following would decrease a firm's cashconversion cycle? a. Increase the accounts receivable days b.Increase the accounts payable days c. Increase the cash days d.Increase the inventory days31. MTN Enterprises, LTD. had sales of $154 million this yearand an average accounts receivable of $18 million per day. Itscredit terms specify “2/14 net 40.” Based on this information, howlong does it take MTN to collect on its sales (on average)? a. 8.5days b. 28 days c. 43 days d. 13 days