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Exam 18: Financial Management

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Question 101

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Based on the time value of money, $100 received a year from today is worth more than $100 received today.

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Question 102

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Energy-wise Builders, Inc, a leader in residential housing, recently negotiated a financing arrangement with First Pennsylvania Bank. The short-term funding agreement guarantees a specified amount of funds would be made available upon Energy-wise's request. This arrangement represents a:

A) line of credit.
B) pledging agreement.
C) revolving credit agreement.
D) contingency reserve.

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Question 103

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As a finance manager at AllSports Communication, Charlie worries about the firm's borrowing requirements for the upcoming year. He knows the benefit of estimating AllSports' cash disbursements and short-term investment expectations. Facing these concerns, a(n) would provide Charlie with valuable information by providing a good estimation of whether the firm will need to do short-term borrowing.

Financial managers are responsible for budgeting, auditing, and advising top management on financial matters.

In order to assist in revenue realization, a(n) allocates resources throughout the firm.

Finance managers need funds for capital purchases, but seldom for the day to day operations.

Mark manages credit and collections at Polly Parrot Pet Supplies, Inc. He is responsible for accounts receivable and accounts payable. These activities suggest that his job is in financial management.

The managers of Dakota Clothing regularly compare their actual profits with the firm's projected profits. When deviations occur, the managers use the feedback to take corrective action when necessary. The management of Dakota Clothing is exercising financial:

Trade credit is the practice of buying goods now and paying for them later.

offers financially stable corporations a technique to raise short-term funds by issuing unsecured promissory notes to the general public with the promise of repayment within 270 days.

A budget's primary purpose is to provide managers with a financial summary of past operations.

If you are at the Phoenix Sky Harbor International Airport, you will no longer get a pat-down if you go through the metal detector. The airport now has full body screening ports that scan the entire body and readily detect weapons or explosive devices that someone may want to take on board a plane. These expensive devices represent:

Financial managers use data prepared by accountants to develop strategies for improving the financial performance of the firm.

Commercial finance companies normally charge lower rates on short-term loans than those charged by commercial banks.

Venture capital firms look to invest their funds in firms that .

Is there something in a name? April Gardner was told that she would grow-up to be a "master gardener". She didn't really believe that stuff, but now she finds herself in charge at a large city-owned botanical garden. She is requiring her staff to pursue continuing education. To put her money where her mouth is, she will enroll in a couple of accounting and finance courses at the local community college because this is an area where she is weak. This is a good plan - especially since she is the boss.

Karen, a financial manager with Bigbux Incorporated, regularly compares actual revenues and expenses against their projected values. After identifying areas with significant deviations from planned values, she investigates to find the cause of these variances. Karen's activities represent the steps involved in the preparation of Bigbux's capital budget.

Successful businesses establish restrictive credit policies encouraging customers to pay cash.

Reality Films, Inc. is a very profitable company whose stock has appreciated in market value during the past ten years. Even though the firm was established several years ago, it does not pay its stockholders dividends. Reality Films reinvests its earnings. Which of the following statements might best reflect the sentiments of its chief financial officer (CFO) ?

A revolving credit agreement is designed to reduce the risk of lending money.