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Exam 18: Financial Management

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Question 161

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The first step in financial planning is to develop a budget to better control costs.

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Question 162

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If a firm sells shares of stock,it is financing with ________.

A) debt
B) liabilities
C) spectator capital
D) equity

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Question 163

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

By identifying variances from the financial plan,managers are able to focus on those departments that require corrective action.

Lancer Wholesale Company wants to improve cash flow.Which of the following strategies would be most likely to help Lancer achieve this objective?

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

A(n) _____________ job includes forecasting,budgeting,cash flow analysis,cost control,taxes,and credit management.

A tool that provides lots of convenience,credit cards are a source of a readily available line of credit for a small business because they provide convenience.

Virginia Supply offers their customers trade credit with terms 2/15 net 30.This implies that:

The finance manager at AllSports Communication has asked his assistant,Ben,to prepare the ________ budget.Ben will gather as much information as possible by utilizing the firm's other budgets and any documents that summarize proposed financial activities.

Financial managers devote the majority of their time obtaining long-term financing to fund the firm's capital expenditures.

Carlos is the manager of Oh! Canada Sporting Goods.During the past six months,his cash expenditures have exceeded his cash receipts.Oh! Canada is suffering from a(n) ________ problem.

Equity financing represents funds acquired from within the firm or through the sale of stock,representing ownership in the company.

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

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) ?

Arborview Plant Science Company has invented a drought resistant grass seed that only needs watering three times each year.In order to expand distribution world wide,the company whose product produces lush green foliage needs a large amount of funding - fast! The handful of seed scientists that own the company decides to offer shares of stock to general investors.This first-time offering is a(n) :

Equity financing must be repaid.

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:

Smaller firms have greater access to capital than larger firms.

Although best used as a last resort,many small businesses find it convenient to use __________ as a short-term source of financing.Although this form short-term debt comes with high interest rates,it provides a quick line of credit for many firms,including start-up companies who may not be able to secure bank loans.