The Lumber Mart recently replaced its management team. As a result, the firm is implementing a restrictive short-term policy in place of the flexible policy

The Lumber Mart recently replaced its management team. As a result, the firm is implementing a restrictive short-term policy in place of the flexible policy under which the firm had been operating. Which of the following should the employees expect as a result of this policy change? I. reduction in sales due to stock outs II. greater inventory selection III. decreased sales due to the new accounts receivable credit policy IV. decreased investment in marketable securities    A.  I and II only B.  II and IV only C.  I, II, and IV only D.  I, III, and IV only E.  I, II, III, and IV Refer to section 18.3

40.

A flexible short-term financial policy:    A.  increases a firm's need for long-term financing. B.  minimizes net working capital. C.  avoids bad debts by only selling items for cash. D.  maximizes fixed assets and minimizes current assets. E.  is most appropriate for a firm with relatively high carrying costs and relatively low shortage costs. Refer to section 18.3

41.

A flexible short-term financial policy: I. increases shortage costs due to frequent cash-outs. II. tends to increase sales as compared to a restrictive policy. III. requires a sizeable investment in current assets. IV. incurs more carrying costs than a restrictive policy.    A.  I and IV only B.  II and III only C.  I, II, and III only D.  II, III, and IV only E.  I, III, and IV only Refer to section 18.3

42.	Shortage costs include which of the following? I. disruption of production schedules II. inventory ordering costs III. lost customer goodwill IV. brokerage costs    A.  I and II only B.  II and III only C.  II, III, and IV only D.  I, II, and III only E.  I, II, III, and IV Refer to section 18.3

43.

The optimal investment in current assets for an operating firm occurs at the point where:    A.  both shortage costs and carrying costs equal zero. B.  shortage costs are equal to zero. C.  carrying costs are equal to zero. D.  carrying costs exceed shortage costs. E.  the total costs of holding current assets is minimized. Refer to section 18.3