A company has negotiated a credit facility with the following terms:
$5,000,000 line of credit $3,000,000 average borrowing 30 basis point commitment fee on unused portion of line Interest rate on advances is 1-month LIBOR plus 4% 1-month LIBOR is currently 2% Compensating balance requirement of 20% on the outstanding borrowings
------
What is the effective annual borrowing rate for the line of credit?

• A.6.2%
• B.7.8%
• C.6.0%
• D.9.3%

Comment: *

Name: *

Email: *

Verification: *

The accounting requirement that a product's selling costs be recorded in the same period as the product's revenue is recorded, regardless of when the cash is paid, is an example of the:

• A.historical cost principle.
• B.matching principle.
• C.full disclosure principle.
• D.revenue recognition principle.

Comment: *

Name: *

Email: *

Verification: *

Evaluating the liquidity needs of an organization is a function of:

• A.long-term investment yield forecasting.
• B.long-term cash flow forecasting.
• C.short-term cash flow forecasting.
• D.short-term investment yield forecasting.

Comment: *

Name: *

Email: *

Verification: *

The yield on any short-term investment instrument is a function of the maturity or holding period, the amount paid and:

• A.the issuing price.
• B.the after-tax yield.
• C.the money market yield.
• D.the cash flows received.

Comment: *

Name: *

Email: *

Verification: *

A manufacturing company has no liquidity and needs to purchase additional inventory in 60 days. Which of the following would have helped the company plan for this situation?

• A.A capital budget
• B.A long term forecast
• C.A medium term forecast
• D.A short term forecast

Comment: *

Name: *

Email: *

Verification: *