Management Consultancy Finals

Management Consultancy Finals True/False Indicate whether the statement is true or false. __T__ 1. A CPA after presenting his report in a management services engagement may accept further engagement to render advice and technical assistance in the implementation of his recommendation. ___F_ 2. A non-CPA is prohibited under the revised accountancy law to engage in professional management advisory services practice. ___F_ 3. Documentation is not as essential in an MAS engagement as it is in audit engagement. __F__ 4. Due professional care may or may not be exercised in the performance of a management advisory service engagement __F__ 5. Before accepting an engagement, a practitioner is to inform his client of some if not all of the significant matters related to the engagement __T__ 6. Service delivery is the application of consulting skill and without this, even high levels of knowledge and understanding cannot be put to effective use for clients. __T__ 7. Management advisory services of an accounting firm may be rendered by a man who is primarily an accountant or by a specialist. ___F_ 8. The effect of compensating balances is to decrease commercial paper is correct ___F_ 9. Cost Capital Determination Is about selecting projects in a way that helps a company completing them within the given financial resources. __F__ 10. Financial Leverage is the degree to which a firm uses fixed costs in its production processes. Higher fixed costs are generally associated with more highly automated, capital-intensive firms and industries. ___F_ 11. Capital rationing refers to a systematic approach to financing business activities through a combination of equities and liabilities. Competing capital structure theories explore the relationship between debt financing, equity financing and the market value of the firm. __T__ 12. A requisite to the successful conduct of the problem-solving process is a harmonious relationship with the client __T__ 13. Community involvement offer professionals the opportunity to repay their communities and meet fellow professionals and future business contacts. Multiple Choice Identify the choice that best completes the statement or answers the question. __D__ 14. Which of the following statements is false? a. New developments and transformations could result to management consulting becoming more specialized. b. It is predicted that a consultant’s orientation will be towards being an insight-provider, creator and sharer of information. c. As a consultant grows in number, they tend to develop more sophisticated means of marketing their services. d. Because of the more stringent and technical qualifications required in management

consulting, more notso-bright graduates of accounting, management and business schools will be attracted to careers in this area. __C__ 15. Most definitions of consultancy would include such services related to the following except a. Information Technology b. Corporate Strategy c. Legal Advisory d. Systems and Operations Management __C__ 16. Which of the following statements is incorrect? a. A consultant is hired because generally he is considered independent, objective and detached to the problems faced by the organizations. b. An experienced management consultant possesses special knowledge, skills and a variety of personal attributes that make him the most desirable candidate to undertake management consulting engagement involving his area of expertise. c. The use of consultants is generally much more expensive to the company than hiring full time new managers and employees to provide professional advisory services. d. A consultant is considered a catalyst for change that can assist management in the administration of the business entity. __D__ 17. The actual output of a consulting engagement centers on providing the business organization with the following except a. Valuable information b. Support for internal argument c. Support in acquiring a critical resource d. Support for contesting tax assessments by the BIR ____B 18. Which of the following statements is false? a. CPAs have historically been business consultants to their clients. b. Management consultants are licensed and regulated by laws. c. The primary purpose of management consultancy is to improve the firm’s use of its capabilities and resources to achieve its objectives. d. Management consultancy services are provided not only to big business enterprises but also to mediumsize and small companies. __D__ 19. Management consultancy services are provided not only to big business enterprises but also to mediumsize and small companies. a. Management consultancy b. Income tax work c. Accounting system design and installation d. Technical Development _D___ 20. It is a career structure in consulting firm where it needs to have 5-10 years of consulting experience. a. Analyst b. Consultants c. Senior Consultants/Managers d. Business Development Managers __C__ 21. They are involved in some large, complex consulting projects, and they are the one responsible for building relationship with their clients a. Consultants b. Analyst c. Business Development Managers d. Directors / Partners

__B__ 22. It is described as independent and objective advisory service provided by qualified persons to clients in order to help them identify and analyze management problems or opportunities a. Management Advisory Services b. Management Consulting c. Accounting Firms d. Outsourcing Firms __A__ 23. It consists of that form of management advisory or consulting service in which an analytical approach and process is applied in a study or project. a. Engagement b. Technicality c. Consulting d. Processing Approach _B___ 24. Most definitions of consultancy would include the following, EXCEPT a. Corporate strategy b. Strategic management c. Consulting and System Integration d. Outsourcing ___B_ 25. The following are classifications of problem, except: a. Corrective b. Service delivery area c. Progressive d. Opportunistic __C__ 26. A problems that involves a situation in which conditions have worsened a. Opportunistic b. Progressive c. Corrective d. Techniques ___C_ 27. It refers to the location of the engagement a. Industry or Nature of Organization b. Application of the Analytic Process c. Geographical Areas d. Techniques and Methodologies ___B_ 28. A way of carrying out a particular task a. Methodologies b. Techniques c. Geographical Areas d. Industry or Nature Organizations _D___ 29. The following are the types of consultancy, except: a. Business planning and development (Project feasibility studies) b. Internal audit services c. Information systems consulting d. Nature of the problem __A__ 30. It is the complete redesign of a process with an emphasis on finding creative ways to accomplish an objective a. Reengineering b. Business process c. Methodologies d. Marketing Research

__A__ 31. A type of marketing research that provides answers to questions when those answers need to be expressed in statistical or numerical form. a. Quantitative Research b. Qualitative Research c. Secondary Research d. Primary Research B____ 32. A type of marketing research that provides answer to questions that do not demand a quantified answer. a. Quantitative Research b. Qualitative Research c. Secondary Research d. Primary Research _B___ 33. An audit which is conducted to evaluate the effectiveness and efficiency of operations. a. Internal b. Operational c. External d. None of the above ___A_ 34. ________ Auditing is an independent, objective assurance and consulting activity design to add value and improve an organization’s operations. a. Internal b. Operational c. External d. None of the above __B__ 35. The MAS engagement that involves providing assistance to management in relation to planning, controlling and decision making is a. Financial Management b. Management Accounting c. Taxation d. Financial Accounting __B__ 36. These involve services related to mergers, acquisitions, divestitures, joint ventures, spin-off and strategic alliance. a. Strategic risk management b. Due diligence audit c. Compliance risk management d. Financial risk management ___D_ 37. The following are among the ground rules that a consultant should observe in providing support for internal arguments in a client except a. Introduce and explore options which reconcile different positions in a win-win way b. Be sensitive to who is supporting different positions in the organization c. Build rapport with the client about the strengths and weaknesses of his argument d. Provide the client manager information and insights that will strengthen his position against his adversaries in the organization __D__ 38. The following are managerial accounting-related consultancy services that a CPA may\ provide except a. Variance Analysis b. Financial Statement Services c. Cost Analysis for Managerial Decision d. Evaluation of Working Capital Requirements of the Business Entity

__D__ 39. The following are areas of consideration in determining the scope of services that a CPA may perform except a. Independence b. Competence c. Requirements for specialization d. Range of fees that the consultant will earn in each type of service ___C_ 40. These are enterprises involved in varied business endeavors such as merchandising, manufacturing, financial services and are potential consultancy clients. a. Professional association b. Not-for-profit nongovernmental organizations c. Privately-owned business firms d. Government agencies ___D_ 41. Services rendered to troubled businesses by emphasizing on the implementation, rationalization and recovery programs designed to rebuild value a. Dispute analysis and investigation b. Computer risk management c. Valuation services d. Business recovery services _D___ 42. This engagement involves the review of compliance with regulatory requirement and ethical conduct standards a. Strategic risk management b. Financial risk management c. Operational and systems risk management d. Compliance risk management ___A_ 43. A personal attribute of consultant that refers to his/her ability to view situations in perspective and to take action needed on a calm and controlled basis without being diverted from a sound, logical and ethical course by outside pressure. a. Psychological maturity b. Courage c. Physiological equilibrium d. Judgment ___B_ 44. Ability to define objectives and outcomes is an example of a consultant’s a. Relationship-building skills b. Project management skills c. Analysis skills d. Interpersonal skills __D__ 45. Project management skills require the following except a. Ability to define objectives and outcomes b. Ability to develop formal plans c. Ability to sequence and prioritize tasks d. Ability to accept numerous clients that will enable him/her to generate more income \ thereby spreading himself/herself too thinly __C__ 46. A personal attribute of a consultant that refers his/her ability to anticipate human reactions to differing situations and establish friendly relations and mutual confidence with people at all levels and to recognize and respect the rights of others. a. Integrity b. Capacity for logical thinking and reasoning c. Empathy d. Ambition

__B__ 47. Ability of the consultant to focus and direct the individuals in an organization in a way that brings the whole organization benefits. a. Ability to develop selling strategies b. Ability to demonstrate leadership c. Ability to work effectively as a team member d. Ability to build rapport and trust with the client ___B_ 48. According to him, management consultant must possess the four broad areas of skills. a. Professor J. Owen Cherringtonn b. Professor J. Owen Cherrington c. Professor J. Owen Cherington d. Professor J. Owen Cherringtone ___C_ 49. One of the broad areas of skills that involve the ability to understand and use the following approach in solving business problems. a. Technical skills b. Interpersonal skills c. Consulting process skills d. Consulting skillsa _D___ 50. To attain the highest standards of professionalism, highest levels of performance and meet public interest requirement, a CPA who provides management consultancy services should meet the following basic requirements except: a. Credibility b. Professionalism c. Confidence d. Top of the line and world class facilities. __D__ 51. To achieve the objectives of the accountancy profession, professional accountants including those providing management advisory services should observe among others the following principles except: a. Integrity b. Confidentiality c. Knowledge of up-to-date technical and professional standards. d. Careful selection of clients to include only those big and financially capable business entities. __C__ 52. It is a highly personal characteristic which ensures that practitioner’s statements of findings and recommendation are free of intentional distortions or misstatements. a. Objectivity b. Independence c. Integrity d. Confidentiality __A__ 53. It is the translation of engagement objectives into a structured set of activities and events within a targeted time schedule. a. Planning b. Supervision c. Control d. Implementation __C__ 54. The ability to identify and define client needs, to utilize the analytical approach and process, to apply knowledge of the technical subject matter under consideration, to communicate recommendations effectively and to assist in implementing the recommendations. It is acquired and maintained through a combination of education and experience.

a. b. c. d.

Due care Professionalism Competence Independence

___C_ 55. This individual is normally responsible for the successful completion of engagements, dealing directly with the clients and for “selling” work of consultancy services. a. Senior managers b. Senior consultants c. Partners d. Supervisors __D__ 56. Factors that must be considered when defining the target level of competence of management consultants include the following except: a. Scope of practice area b. Client requirement c. Service variety d. Investment required __C__ 57. Before entering a consulting practice, the prospective consultant should conduct market research to identify opportunities in the market place. This will involve the following except: a. Study of the listing of actively practicing management consultants b. Survey of local CPA firms to determine which are offering consulting services c. News release in Philippine Daily Inquirer about the opening of the consultancy firm d. Identification of new services that may provide a competitive edge. ___D_ 58. In developing MAS practice, goals and objective should include: a. desired income level b. potential clients c. strategies to obtain clients d. all of the above ___A_ 59. The primary source of MAS engagements of the CPA. a. Audit client b. Individuals c. Senior Consultants d. Private Sector ___D_ 60. An engagement program contains the following except a. Engagement objectives b. List of manpower required c. Description of tasks to be accomplished d. Amount of fees to be earned for each tangible output completed ___D_ 61. The objectives of an engagement program include the following except a. To facilitate time and efficiency control over personnel assigned to the engagement. b. To provide a means for arranging, distributing and assigning responsibility for various segments of an engagement. c. To provide a means for evaluating whether all segments of the engagement has in fact been completed. d. To provide a means of determining exactly how much and when to bill the client. __B__ 62. Information about product pricing and costing could be easily make available by the a. Marketing department b. Production department c. Personnel department

d. Accounting department _A___ 63. Information on types of new products or services with market possibilities are usually provided by the a. Marketing department b. Production department c. Personnel department d. Accounting department __D__ 64. Which of the following is generally not considered an effective technique of gathering facts? a. Interviews b. Questionnaires c. Observation d. Cutoff procedures __C__ 65. An analysis strategy whereby numbers are combined in order to understand how they relate to each other. a. Categorization b. Classification c. Numerical analysis d. Correlation __A__ 66. An analysis strategy whereby data, facts or items are sorted into different groups by virtue of their features thereby leading to identification of the significance of the information. a. Categorization b. Classification c. Causation d. Association __C__ 67. In performing this analysis, the preferable procedure is to begin at the top level and then work down to the lowest activity level. a. Unstructured analysis b. Input/output analysis c. Structured analysis d. Decision level analysis __A__ 68. A fact gathering technique that provides a pictorial representation of a dimension of the client’s organization or of its activities. a. Charting b. Document gathering c. Observation d. Interview __B__ 69. Stage where the CPA and the client discuss the proposed professional consulting services. a. Engagement planning b. Negotiating the engagement c. Consulting assignment d. Implementation __B__ 70. Solution development phase of the problem-solving process involves the following steps 1. Detailed development of the selected solution. 2. Choice of the preferred solution alternative. 3. Evaluation of solution alternative. 4. Generation of solution alternative. In what order should the above-listed activities be performed? a. 1,2,3,4

b. 4,3,2,1 c. 2,1,3,4 d. 4,3,1,2 __D__ 71. The following can generally conduct a post-implementation evaluation except a. special audit team selected from among the managers of the client organization. b. an internal audit team. c. external team of consultants. d. independent external audit team. __B__ 72. What of the following is not belong in Generation of Alternative Solutions? a. Delphi approach b. Decision tree approach c. Brainstorming approach d. Pattern recognition and matching approach __A__ 73. Which typically employs one of the mathematical techniques such as linear programming, integral programming and dynamic programming. a. Optimizing approach b. Satisficing approach c. Rationality approach d. Delphi approach ___B_ 74. Which of the following is an example of Rationality approach? a.

b.

c.

d.

__A__ 75. This involves the determination if the alternative solution can be rendered operational by a specified time and/or date in order to achieve certain objectives or avoide certain consequences. a. Scheduling feasibility b. Operational feasibility c. Technical feasibility d. Legal feasibility _A___ 76. This approach emphasizes experience especially this having very similar characteristics to the problem situation being investigated. a. Pattern recognition and matching approach b. Brainstorming approach c. Delphi approach d. SCAMPER approach ___D_ 77. Which of the following is not trie about the Expected Value Computation? (A) weighting the outcomes for the states of nature by the probabilities of occurrence (B) adding up the weighted outcomes to obtain the expected value of the payoff for each solution alternative. (C) choosing the solution alternative having the maximum expected payoff. a. B b. C c. A d. All statements above are true __B__ 78. A a. b. c. d.

Project management tool used to schedule, organize, and coordinate tasks within a project Gantt chart Pert diagram Schedule plan Bubble charts

_A___ 79. It is commonly used in project management which is one of the most popular and useful ways of showing activities (tasks or events) displayed against time. a. Gantt chart b. Pert diagram c. Schedule plan d. Bubble charts __D__ 80. These are the important topics to be discussed in an engagement kick off meeting except: a. Review of the engagement proposal b. Discussion of the work objectives c. Project completion date d. Staffing and project costing __D__ 81. The administrative framework would normally consist of: a. One or more client management committees with representatives from the user areas. b. The top (executive) management. c. The information processing services department. d. All of the above. __B__ 82. These are necessary to keep the project within its time schedule and peso budget. a. Administrative Control b. Time Reporting and Analysis Procedures c. Independent Quality Assurance Reviews __A__ 83. A checklist that contain a series of questions concerning the quality of work performed a. Quality Assurance Checklist b. Independent Reviews c. Preventive Controls d. Feedback Controls __C__ 84. These control establish benchmarks of expected performance a. Quality Assurance Checklist b. Independent Reviews c. Preventive Controls d. Feedback Controls __D__ 85. These are generated by measuring actual performance and comparing it with the expected performance a. Independent Reviews b. Self-assessment c. Administrative Controls d. Feedback Controls ___C_ 86. Planning for the future is called a. Capital budgeting b. Working capital management c. Financial forecasting d. None of the above __A__ 87. The first step in developing a pro forma income statement a. Build a sales forecase b. Determine the production schedule c. Determine cost of goods sold d. None of the above

___B 88. Pro forma statements are ________. a. Actual b. Projected c. A previous year’s __D__ 89. The percent of sales method of financial forecasting shoes us the relationship between ________ and financing needs. a. Changes in the level of liabilities b. Changes in the level of assets c. Changes in debt d. Changes in the level of sales ___A_ 90. Net working capital is the difference between a. Current Assets and Current Liabilities b. Fixed Assets and Fixed Liabilities c. Total Assets and Total Liabilities d. Shareholders’ Investment and cash ___C_ 91. The primary concern of working capital management is the trade-off between a. Financial risk and probability b. Interest rate risk and profitability c. Liquidity risk and profitability d. Purchasing power risk and cash flow maximization __A__ 92. Normally, permanent current assets should be financed with long term financing a. Long term funds b. Short term funds c. Borrowed funds d. Internally generated funds __C__ 93. Ideally, which of the following types of assets should be financed with long term financing a. Fixed Assets only b. Fixed assets and temporary current assets c. Fixed assets and permanent current assets d. Temporary and permanent current assets __C__ 94. Working capital management is primarily concerned with the management and financing of a. Cash and inventory b. Current assets and current liabilities c. Current assets d. Receivables and payables _D___ 95. Harry Company’s bank requires a compensating balance of 20% on a P100,000 loan. If the stated interest on the loan is 7%, what is the effective cost of the loan? a. 5.83% b. 7.00% c. 8.40% d. 8.75% 7000/ (100K - 20K) = 8.75 __D__ 96. A company has just borrowed P2M from a bank. The stated rate of interest is 10%. If the loan is discounted and is repayable in one year, the effective rate on the loan is approximately a. 8.89% b. 9.09% c. 10.00%

d. 11.11% 200K/ 2M - 200K = 11.11% __D__ 97. On January 1, Solar Company received a P300,000 line of credit at an interest rate of 12% from Standard Bank and drew down the entire amount on February 1. The line of credit agreement requires that an amount equal to 15% of the loan be deposited into a compensating balance account. What is the effective annual cost of credit for this loan arrangement? a. 11.00% b. 12.00% c. 12.94% d. 14.12% 12%/ 100% - 15% = 14.12% __B__ 98. Is the degree to which a firm uses fixed costs in its production process. a. Financial Leverage b. Operating Leverage c. Capital Structure d. Contribution Margin __D__ 99. Which of the following is characteristic of leverage buyouts? a. Buyouts are usually financed by debt. b. Some corporate assets are often sold after the buy-out is completed c. Funds for the buy-out are raised through securities markets d. All the above are characteristics __C__100. Which of the following statements is true? a. Harmonious relationship with the client is not essential in successfully conducting the problem-solving process in a consultancy engagement b. There is no need to prepare a written announcement to the client’s employees on the appointment of the consultant as well as the terms of the consulting engagement if a contract has already been drawn and signed by the client’s representative and the consultant c. Continuing to take on every consulting opportunities could mean that the consultant’s growth in expertise and reputation are not advancing d. A consultant can simply dump or abandon a client when the same does not promise to be financially rewarding to the practice anymore __D__101. All of the following could justify abandonment of some clients except a. Overly specialized b. Beneath the growing fee structure c. Unchallenging d. A competitor can simply dump or abandon a client when the same does not promise to be financially rewarding to the practice anymore __D__102. The following are ways through which the consultant can establish an attitude of helpfulness towards the client staff except a. Maintain an “open-door policy” b. Welcoming questions and communication with anyone at any time c. Arrange meetings for discussion of the problem and provide written summaries of the meetings d. Require employees to submit to him a written memo on matters they want to be clarified about

___C_103. The following are ways of abandoning a client gracefully except a. Explaining to the client that certain assignments cannot be cost- effectively handled any more b. Providing the client with advance notice that the consultant will be accepting lesser assignments, workshops and appearances c. Sending the client a written communication of the higher rates the firm will be charging due to its higher operating costs and the apprehension that the client cannot afford to pay the consultant any more d. Offer to transfer the skills to the client, if appropriate __C__104. The following are types of written presentation except: a. b. c. d.

Formal letters Discussion outlines In-person presentation Prospectus and Manuals

__A__105. This is a type of written presentation which is difficult to write, expensive to produce and almost never read in their entirety by anyone other than the consultant’s proof-reader. a. b. c. d.

Formal letters Discussion outlines In-person presentation Prospectus and Manuals

__A__106. The art of saying things properly and effectively; it touches on grammar, style, and construction. a. b. c. d.

Wordsmithing Editing Communication Paraphrasing

_B___107. The following are essential in preparing in-person presentation except a. b. c. d.

Timing Place Dress Atmosphere

__D__108. The following are essential tips for making good presentation except a. b. c. d.

Command your audience Make eye contact (one person at a time); avoid “panning” the audience Pause periodically Look to the ceiling from time to time to remember the details of your presentation

__C__109. _____ is one of the considerations that the consultants must put focus on. It answers the question, “How long does the consultant need to get his/her points across, and how much time is the client willing to make available?” a. b. c. d.

Length of time for the presentation Timing Size of Audience Composition of audience

__D__110. The following are the common mistakes to avoid during the presentation except a. Answering the right questions but failing to provide enough background on the basis for

the conclusions. b. Failing to address the client’s primary concerns, key issues, or pet peeves. c. Trying to sell future services via the presentation. d. Allowing adequate time to prepare the presentation. Essay 111. Give the 4 traditional areas of expertise in CPA Firms AUDITING MANAGEMENT CONSULTANCY INCOME TAX / TAX ADVISORY SERVICES ACCOUNTING SYSTEM DESIGN AND INTALLATION AMIA 112. Broad areas of skills of a management consultant Technical skills Interpersonal skills Consulting process skills TIC

.

113. Give atleast 3 fields of technical consultation in developing MAS practice Engineering Industrial management Marketing Business management Financial areas FIMEB 114. It serves as the nucleus of a consulting engagement and provides a guide to staff assignment and completion dates. Project plan 115. This will play a key role in establishing the tenor of the project and should be carefully orchestrated to cover significant points in the project process Engagement kick off meeting 116. This serves as the blueprint for execution of the engagement Detailed workplan 117.

It is the process of taking the task estimates and dependencies as well as the project team assignments and availability and matching them against a calendar Scheduling

118. It means planning , executing, scheduling and controlling activities to provide solutions to the identified problems Project management 119. Its purpose is to enable the project leader to present to the team members the engagement background and objective and to outline clearly the roles that each person will play in the project Team briefing 120. Planning is not just about defining a course of action. It is about building in the ________ to respond to the unexpected. Flexibility

121. Give five attributes essential to successful consultants.

Good physical and mental health • Professional etiquette and courtesy • Stability of behavior • Self-confidence • Personal effectiveness and drive • Integrity Independence • Intellectual competence • Good judgment • Strong analytical or problem solving ability • Creative imagination • Ability to communicate and persuade • Psychological maturity • Skill in interpersonal relationship • Technical knowledge SIPSIP 122. Types of Training Methods Formal Training Ongoing Training Informal Training IFO 123. Process of Group Formation Formation Brainstorming Emergence of Consensus Performance FBEP 124. “The way we do things here” happens before or during _________________. Initial Assignment 125.

The higher the management position the lesser chance to perform ____________. Technical Skills

126.

Process of group formation whereas members meet for the first time? Formation

127. alculate the forecasted Sales level.

C

Express Inventory as percentage of sales Find the Pro-Forma balance for Accounts Payable 600 x 1.27= 762 700/600= 116.67 140/600x762=177.8 128. Give the 2 methods in estimating the external financing required. Projected or pro forma financial statement method Formula method 129. What is formula in getting the ADDITIONAL FINANCING REQUIRED?

130. It is sometimes referred to as gross working capital simply refers to current assets. Working Capital 131. Is the excess of current assets over current liabilities. Net Working Capital 132. Involves the determination of the level, quality and maturity of each major current asset and current liability. Working capital management 133. This approach uses permanent or long-term financing source to finance all permanent assets Conservative approach 134. This is a policy that is between the relaxed and restricted approach. Moderate Policy

135. What are the Reasons for Holding Cash. Transaction Motive Precautionary Motive Speculative Motive Contractual Motive TPSC 136. Given the following inventory information and relationships for the Baguio Corporation: • • • • • • •

Orders can be placed only in multiples of 100 units. Annual unit usage is 300,00 (Assume a 50-week year in your calculations.) The carrying cost is 30 percent of the purchase price of the goods. The purchase price is P10 per unit. The ordering cost is P50 per order. The desired safety stock is 1,000 units. (This does not include delivery time stock.) Delivery time is two weeks.

Requirement: • What is the optimal EOQ level? • Total ordering cost • Average inventory • Total carrying cost • Total inventory cost • Reorder point EOQ = Square root of 2 x 300,000x 50 all over 10 x 30% = 3,162 or 3,200 Total Ordering Costs = 300.00/3,200 x 50 = 4,687.5 Average inventory = 3,200/2 = 1,600 Total Carrying costs = 1600 x 3 = 4800 Total Inventory cost = 4,687.5 + 4800 = 9,487.5 Reorder Point = ((1600/2) x 2) + 1000 = 13,000 137. Factors in selecting source of short-term fund effective cost of credit, availability of credit influence of the use of a particular credit additional covenants of the loans 138. ___________ include all those sources that have as their security only the lender’s faith in the ability of the borrower to repay the funds when due. Unsecured Credit 139. ____________ is an unsecured short-term promissory note sold in the money market by highly credit-worthy firms. Commercial Paper 140. Four Factors Influencing Capital Structure Decisions Business Risk The firms tax position FInancial flexibility Managerial Aggressiveness

141. 4 major areas of selling of consulting services PRESENT CLIENT ACTIVITIES NON CLIENT RELATIONSHIPS PUBLIC RELATIONS OR PROMOTIONAL ACTIVITIES POTENTIAL CLIENT ACTIVITIES 142. Two points a consultant must address before making the presentation What to say How to say it