Unit quiz: Downside, timing and incremental economics

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5 questions · 80% to pass · no timer. This quiz checks the lessons in this unit. These authored questions assess recognition and application of the taught distinctions, not professional qualification. You may review the lessons and retry. Repeat attempts reuse the question bank; a remembered answer is not proof of transfer to a new situation.

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Question 1

Ridge has $9,000 defined monthly available cash and $6,000 scheduled service: coverage 1.50×. If available cash drops to $5,400, coverage is 0.90×. The second numerator is below service. Neither number is an approval decision or a substitute for a dated cash forecast.

Owner: “The base ratio passes my broker’s rule; can we stop analyzing?”No. Verify the numerator, lender definition, downside and daily timing before recommending anything.Yes. One ratio universally overrides all cash-flow and contract risks.

Question 2

Tide opens Monday with $2,000 and payroll of $3,000 leaves before a customer pays Friday. Monday’s balance becomes -$1,000 before that collection. A positive Friday balance cannot retrospectively cover Monday’s gap. Verify actual settlement dates and any available, permitted buffer.

Owner: “Friday’s collection makes the whole week affordable, correct?”Yes. Only the week-end balance matters.Not if payroll leaves first and there is no verified buffer; we need the minimum dated balance.

Question 3

Assume old remaining scheduled outflow and payoff both equal $20,000. New gross $40,000, fees $2,500, old payoff $20,000: net new cash $17,500. New purchased amount $40,000 × 1.3 = $52,000. New total − old remaining − net new cash = $14,500 incremental dollar cost, with no other charges.

Owner: “The renewal gives me the whole new gross amount to use?”No. Under these assumptions only $17,500 is new usable cash.Yes. The old payoff and fees do not reduce usable cash.

Question 4

Harbor hears “no penalty,” yet its quote still includes the unpaid fixed purchased amount. Ask whether any discount is contractual, discretionary or unavailable, and whether the deadline changes the amount. Avoid inventing a legal entitlement to a rebate.

Owner: “No penalty means I only pay for the days I used the money?”Yes. All financing automatically prorates its cost by days outstanding.Not necessarily; fixed charges can remain, so we need the exact payoff terms and dated quote.

Question 5

Ridge needs a machine and recurring materials. A machine-specific term structure and a monitored working-capital line solve different problems. Combining them also changes aggregate service and collateral, so independent feasibility of each does not prove feasibility together.

Owner: “Choose whatever pays your brokerage the most.”The comparison must center your needs and risks, disclose compensation and include not proceeding.Then the highest-commission product is automatically the right recommendation.

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