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Exam 18: Financial Management

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Question 141

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Accepting credit cards, such as MasterCard or Visa, enables a firm to decrease the expense of extending credit to customers.

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Question 142

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When his firm is owed money, the financial manager tries to collect as early as possible.

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Question 143

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The first time a company offers to sell its stock to the general public is called an initial private label (IPL).

Managing a firm's resources so that it can meet its goals and objectives is the goal of financial accounting.

Effective managers strive to minimize their firm's cost of capital.

When using equity financing, firms incur a legal obligation to repay the amount of money invested.

Business organizations always use long-term financing for (both) short-term and long-term needs, but they never use short-term financing for (both) short-term and long- term needs.

Big Bear Ski Lodge owners know that the lifts on the north slope will need replacing in the next two years. Three months prior to replacement, they will include the expenditure in their cash budget.

As the chief financial officer (CFO) for a medium-sized service company, Shelley is concerned about the possibility of temporary cash shortages. Given the irregular cash flows from seasonal sales, she wants to ensure that her company's bank will provide adequate funds to cover any potential cash flow problem. The best strategy to ease Shelley's concern would be to arrange a revolving credit agreement with the bank.

Some suppliers hesitate to offer trade credit to firms with a poor credit history. In these cases, the supplier may insist that the customer sign a(n) :

A capital budget highlights the expected funds provided by owner investments.

Finance managers spend the majority of their time managing .

Successful use of financial leverage requires a firm to:

The two primary sources of long-term business financing are government loans and debt capital.

When using financing, the company incurs a legal obligation to repay the amount borrowed.

Lending institutions may offer a borrower a percentage of the value of the borrower's accounts receivable so the borrowing firm can continue to operate while it waits to collect on its credit sales. This process is called .

No matter the size of the business, finance is a critical activity for:

Debt financing refers to funds acquired from the profitable operations of a firm or through the sale of ownership in the firm.

One of the challenges of effective financial management is:

Business match their long-term capital needs to: