Question 1

________ provide financing to new or emerging companies with high profit potential. In return, these organizations expect a share of ownership in the company.

Accepted Answer

A)   Commercial banks
B)   Venture capital firms
C)   Federal Reserve banks
D)   Investment bankers

Question 2

Which of the following correctly identifies areas of authority and responsibility for a chief financial officer (CFO) ?

Accepted Answer

A)   accounting and finance
B)   marketing and finance
C)   production and accounting
D)   finance and research and development

Question 3

Identify and describe three types of short-term financing.

Accepted Answer

Students may mention that short-term fin...

Question 4

A firm will choose to seek debt financing only for the purpose of paying for short-term operating needs.

Accepted Answer

A) True 
 B)False

Question 5

Many small businesses rely on factoring as a source of short-term financing because

Accepted Answer

A)   factoring provides a much cheaper source of funds than bank loans.
B)   interest paid to a factor qualifies for a tax credit.
C)   small firms often find it difficult to qualify for bank loans.
D)   loans provided by factors do not require collateral.

Question 6

A term-loan agreement requires the borrower to repay the loan in one lump sum at the end of the loan period.

Accepted Answer

A) True 
 B)False

Question 7

Pages and Pages Booksellers is seeking financing to fund the opening of two new locations in nearby college towns. There is no need to consider debt financing for this project. It will require a sizeable investment in equity funds.

Accepted Answer

A) True 
 B)False

Question 8

Explain the role the operating budget, the capital budget, and the cash budget play in financial planning.

Accepted Answer

The operating budget (master budget) tie...

Question 9

A major concern for firms selling on credit is

Accepted Answer

A)   the realization that many credit customers always pay their bills.
B)   the large amount of assets tied up in accounts receivable.
C)   the resulting increase in the debt ratio for the firm.
D)   the inability to utilize factoring as a source of financing.

Question 10

Snowy Mountain Ski Lodge's cash budget for the month of March 2019 shows a negative amount. Due to the fact that the months of January and February were quite lucrative and showed positive amounts, the finance manager will not borrow any money in the short term to cover for March's deficit.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following would normally involve long-term financing?

Accepted Answer

A)   workers' salaries
B)   unanticipated emergencies
C)   purchase of modern equipment
D)   expansion current inventory

Question 12

The overall objective of financial planning is to

Accepted Answer

A)   forecast the impact of technological trends.
B)   prepare financial statements for managers.
C)   optimize the firm's profitability.
D)   establish budgets for financial control.

Question 13

Epic Electronics holds commercial paper issued by SafeONE Insurance that matures in 180 days. However, shortly after Epic purchased the commercial paper, SafeONE went out of business. The finance manager for Epic is not worried because his loan to the corporation is secured by collateral that he can now claim.

Accepted Answer

A) True 
 B)False

Question 14

Long-term financing would normally be used to purchase

Accepted Answer

A)   supplies.
B)   inventory.
C)   buildings.
D)   highly liquid assets.

Question 15

Which of the following commonly results in the financial failure of a firm?

Accepted Answer

A)   diversification
B)   undercapitalization
C)   control of expenses
D)   management of cash flows

Question 16

Which of the following provides the buyer with collateral?

Accepted Answer

A)   common stock
B)   secured bond
C)   unsecured bond
D)   debenture bonds

Question 17

________ 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.

Accepted Answer

A)   Trade credit
B)   A line of credit
C)   Factoring
D)   Commercial paper

Question 18

Undercapitalization refers to the problem of insufficient start-up funds.

Accepted Answer

A) True 
 B)False

Question 19

Businesses acquire long-term financing from two major sources,

Accepted Answer

A)   debt financing and government funds.
B)   equity financing and trade credit.
C)   retained earnings and commercial paper.
D)   debt financing and equity financing.

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 18: Financial Management

Correct Answer
verified

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

Correct Answer
verified

A major concern for firms selling on credit is

Correct Answer
verified

Snowy Mountain Ski Lodge's cash budget for the month of March 2019 shows a negative amount. Due to the fact that the months of January and February were quite lucrative and showed positive amounts, the finance manager will not borrow any money in the short term to cover for March's deficit.

Correct Answer
verified

Undercapitalization refers to the problem of insufficient start-up funds.

Correct Answer
verified

The overall objective of financial planning is to

Correct Answer
verified

A firm will choose to seek debt financing only for the purpose of paying for short-term operating needs.

Correct Answer
verified

________ provide financing to new or emerging companies with high profit potential. In return, these organizations expect a share of ownership in the company.

Correct Answer
verified

Which of the following would normally involve long-term financing?

Correct Answer
verified

Which of the following correctly identifies areas of authority and responsibility for a chief financial officer (CFO) ?

Correct Answer
verified

Many small businesses rely on factoring as a source of short-term financing because

Correct Answer
verified

Pages and Pages Booksellers is seeking financing to fund the opening of two new locations in nearby college towns. There is no need to consider debt financing for this project. It will require a sizeable investment in equity funds.

Correct Answer
verified

Long-term financing would normally be used to purchase

Correct Answer
verified

A term-loan agreement requires the borrower to repay the loan in one lump sum at the end of the loan period.

Correct Answer
verified

________ 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.

Correct Answer
verified

Which of the following provides the buyer with collateral?

Correct Answer
verified

Identify and describe three types of short-term financing.

Correct Answer
verified
Students may mention that short-term fin...
View Answer

Businesses acquire long-term financing from two major sources,

Correct Answer
verified

Which of the following commonly results in the financial failure of a firm?

Correct Answer
verified

Explain the role the operating budget, the capital budget, and the cash budget play in financial planning.

Correct Answer
verified
The operating budget (master budget) tie...
View Answer

Exam 18: Financial Management

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A major concern for firms selling on credit is

Correct AnswerverifiedShow Answer

Snowy Mountain Ski Lodge's cash budget for the month of March 2019 shows a negative amount. Due to the fact that the months of January and February were quite lucrative and showed positive amounts, the finance manager will not borrow any money in the short term to cover for March's deficit.

Correct AnswerverifiedShow Answer

Undercapitalization refers to the problem of insufficient start-up funds.

Correct AnswerverifiedShow Answer

The overall objective of financial planning is to

Correct AnswerverifiedShow Answer

A firm will choose to seek debt financing only for the purpose of paying for short-term operating needs.

Correct AnswerverifiedShow Answer

________ provide financing to new or emerging companies with high profit potential. In return, these organizations expect a share of ownership in the company.

Correct AnswerverifiedShow Answer

Which of the following would normally involve long-term financing?

Correct AnswerverifiedShow Answer

Which of the following correctly identifies areas of authority and responsibility for a chief financial officer (CFO) ?

Correct AnswerverifiedShow Answer

Many small businesses rely on factoring as a source of short-term financing because

Correct AnswerverifiedShow Answer

Pages and Pages Booksellers is seeking financing to fund the opening of two new locations in nearby college towns. There is no need to consider debt financing for this project. It will require a sizeable investment in equity funds.

Correct AnswerverifiedShow Answer

Long-term financing would normally be used to purchase

Correct AnswerverifiedShow Answer

A term-loan agreement requires the borrower to repay the loan in one lump sum at the end of the loan period.

Correct AnswerverifiedShow Answer

________ 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.

Correct AnswerverifiedShow Answer

Which of the following provides the buyer with collateral?

Correct AnswerverifiedShow Answer

Identify and describe three types of short-term financing.

Correct AnswerverifiedStudents may mention that short-term fin...View AnswerShow Answer

Businesses acquire long-term financing from two major sources,

Correct AnswerverifiedShow Answer

Which of the following commonly results in the financial failure of a firm?

Correct AnswerverifiedShow Answer

Explain the role the operating budget, the capital budget, and the cash budget play in financial planning.

Correct AnswerverifiedThe operating budget (master budget) tie...View AnswerShow Answer

Correct Answer
verified

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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Students may mention that short-term fin...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The operating budget (master budget) tie...
View Answer