FIRST ASIAN INTERNATIONAL SYSTEMS COLLEGE, INC.

SENIOR HIGH SCHOOL DEPARTMENT

Learning Activity Sheets (LAS)

Name of Learner: __________________________________

Grade Level: ______________________________________
Section: __________________________________________
Date: ____________________________________________

Business Finance

WEEK 3 – Tools in managing cash, receivables and inventory cash management

EXERCISES/ACTIVITY/QUIZES

A. True or False. State whether the statement is True (T) or False (F).
__________1. Cash forecasts indicate the most likely future cash
inflows and outflows.
__________2. Cash is the highest earning current asset.
__________3. Investment securities are mostly equity shares.
__________4. The objective inventory management is to ensure that
all customer demands are always met.
__________5. Economic Order Quantity (EOQ) is that quantity for
which number of orders is the least.
__________6. Management of cash means management of cash
inflows.
__________7. Cash is the most important but least earning current
asset.
__________8. Cash management always attempts at minimizing the
cash balance.
__________9. Cash cycle is equal to operating cycle of a firm.
__________10. Receipt and Disbursement method of preparation of
cash budget is the most widely used method.
__________11. Receivables management deals only with the
collection of cash from the debtors.
__________12. Receivables management involves a trade-off
between costs and benefits of receivables.
__________13. The objective of a credit policy is to curtail the credit
period allowed to customers.
__________14. Credit period allowed to customers must be equal to
credit period allowed by the supplier of the firm.
__________15. Delinquency cost refers to bad debt losses of the firm.
__________16. Liberalizing the discount rate means increasing the
discount rate of the same period.
__________17. Credit evaluation of a customer is a cost process
hence it need not be undertaken by a selling firm.
__________18. In order to minimize the level of receivables, a firm
should follow strict and aggressive collection procedures.
__________19. Ageing schedule of receivables is one way of
monitoring the receivables.
__________20. Inventory management does not include management
work on process.
__________21. Stock of finished goods should be as high as possible so
that NO customer is denied the sale.
 __________22. There is no explicit benefit of keeping inventory, hence
no stock be maintained.
__________23. Carrying costs of inventory includes carrying in.
__________24. Carrying costs and ordering cost are opposite forces in
receivable management.
__________25. Cost of stock out occurs whenever the firm has no stock
of a particular item.

B. Multiple Choices. Select the letter of the correct answer.

1. Which of the following is a motive for holding cash?
a. Transaction Motive
b. Precautionary Motive
c. Speculative Motive
d. All of the given
2. Which if the following is one of the primary objectives of cash
management?
i. Maximize cash balance held by the firm
ii. Meet the cash disbursement requirements of the firm
iii. Minimize disbursement float.
a. I only
b. II only
c. III only
d. I,II and III
3. Which of the following is NOT one of the basic decisions which are to
be made regarding receivables?
a. To which customer credit should be allowed.
b. How much cash is to be kept in bank.
c. How much of credit to be given to each customer
d. For what length of time the credit should be allowed.
4. If a firm lengthens its credit period, it will increase:
i. Sales
ii. Bad Debts
iii. Profits
a. I only
b. II only
c. III only
d. I,II and III
5. The negative aspect of inventory holding are:
a. It blocks money
b. Deteriorations and spoilage of inventory
c. It requires space for storage or holding hence adds to the cost
d. All of the given

Prepared by:

Hannah May C. De Ala