Question1: Ski Lifts Inc. is a highly seasonal business. The following summary balance sheet provides data for peak and off peak seasons [in thousands of dollars]:
|
|
Peak Off-peak
|
|
|
Cash
|
$ 50
|
$ 30
|
|
Marketable securities
|
0
|
20
|
|
Accounts receivable
|
40
|
20
|
|
Inventories
|
100
|
50
|
|
Net fixed assets
|
500
|
500
|
|
|
$690
|
$620
|
|
Spontaneous
|
|
|
|
liabilities
|
$ 30
|
$ 10
|
|
Short-term debt
|
50
|
0
|
|
Long-term debt
|
300
|
300
|
|
Common equity
|
310
|
310
|
|
|
$690
|
$620
|
From this information we may conclude that
[A] Ski Lifts have a working capital financing policy of exactly matching asset and liability maturities.
[B] Ski Lifts' working capital financing policy is relatively aggressive; that is, the company finances some of its permanent assets with short term discretionary debt.
[C] Ski Lifts follow a relatively conservative approach to working capital financing; that is, some of its short-term needs are met by permanent capital.
[D] Without income statement data, we cannot determine the aggressiveness or conservatism of the company's working capital financing policy.
[E] Both statements A and C are correct.
Question2: Which one of the following aspects of banks is considered most relevant to businesses when choosing a bank?
[A] Size of the bank's deposits.
[B] Experience of personnel.
[C] Loyalty and willingness to assume lending risks.
[D] Convenience of location.
[E] Competitive cost of services provided