Question 1

Money has time value due to the fact that if invested,it has the potential to earn more money at some point in the future.

Accepted Answer

A) True 
 B)False

Question 2

__________ represent a favorable source of meeting long-term financing needs because there are no interest payments,dividends,or underwriting fees required when using this source.

Accepted Answer

A)   Secured bonds
B)   Debentures
C)   Warrants
D)   Retained earningsE) A) and B)
F) A) and C)

Question 3

Trade credit represents one of the most expensive forms of short-term financing.

Accepted Answer

A) True 
 B)False

Question 4

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.

Accepted Answer

A) True 
 B)False

Question 5

What are two major forms of debt financing? Describe and differentiate between the two types.

Accepted Answer

The two forms of debt financing are 1)se...

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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 developmentE) None of the above
F) A) and D)

Question 8

Capital expenditures are major investments in long-term assets such as property and equipment.

Accepted Answer

A) True 
 B)False

Question 9

Inventory financing represents the selling of accounts receivables as collateral for a loan.

Accepted Answer

A) True 
 B)False

Question 10

Liberty Electronics wants to predict how much money it can make this coming year.Liberty would benefit from developing a:

Accepted Answer

A)   master budget.
B)   consolidated income statement.
C)   short-term forecast.
D)   statement of cash flows.E) C) and D)
F) B) and C)

Question 11

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

Accepted Answer

A)   debt
B)   equity
C)   retained earnings
D)   commitmentE) B) and D)
F) B) and C)

Question 12

Which of the following statements about taxes is accurate?

Accepted Answer

A)   Taxes represent an inflow of cash to the firm.
B)   Profitable businesses usually pay taxes.
C)   Tax management falls within the responsibility of marketing managers.
D)   Taxes cannot be managed because of fluctuations in political policy.E) C) and D)
F) None of the above

Question 13

Undercapitalization refers to the problem of:

Accepted Answer

A)   insufficient start-up funds.
B)   inadequate control of expenses.
C)   inappropriate cash flows.
D)   under-valued capital stock.E) A) and D)
F) B) and C)

Question 14

A less established company,or a company with a high debt to equity ratio would be considered a riskier investment to the lender.Which of the following principles attests to this axiom?

Accepted Answer

A)   Direct relationship principle
B)   Compensating balance concept
C)   Risk/return trade-off
D)   Cost-benefit analysisE) A) and D)
F) B) and C)

Question 15

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.

Accepted Answer

A) True 
 B)False

Question 16

A _________ forecast predicts the revenues,costs,and expenses a firm will incur for a period of one year or less.

Accepted Answer

A)   near-horizon
B)   short-term
C)   capital expenditures
D)   tacticalE) None of the above
F) All of the above

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Which of the following organizations would be most likely to acquire short-term funding by issuing commercial paper?

Accepted Answer

A)   A well known,financially stable corporation
B)   A small business that is unable to qualify for loans from commercial banks
C)   A firm with a significant percentage of current assets held as accounts receivable
D)   A company that prefers equity financing to obtain short-term fundsE) A) and D)
F) All of the above

Question 20

Robert intends to major in business.He has never had much interest in subjects with numbers.He would like to avoid taking any finance courses if possible.Robert should:

Accepted Answer

A)   avoid finance courses and focus on subjects that he enjoys.
B)   take a finance course to satisfy graduation requirements.
C)   realize that his success in business requires an understanding of financial issues.
D)   change majors and go into the arts.E) C) and D)
F) A) and D)

Exam 18: Financial Management

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

Correct AnswerverifiedShow Answer

Which of the following organizations would be most likely to acquire short-term funding by issuing commercial paper?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Money has time value due to the fact that if invested,it has the potential to earn more money at some point in the future.

Correct AnswerverifiedShow Answer

Trade credit represents one of the most expensive forms of short-term financing.

Correct AnswerverifiedShow Answer

What are two major forms of debt financing? Describe and differentiate between the two types.

Correct AnswerverifiedThe two forms of debt financing are 1)se...View AnswerShow Answer

Capital expenditures are major investments in long-term assets such as property and equipment.

Correct AnswerverifiedShow Answer

__________ represent a favorable source of meeting long-term financing needs because there are no interest payments,dividends,or underwriting fees required when using this source.

Correct AnswerverifiedShow Answer

Robert intends to major in business.He has never had much interest in subjects with numbers.He would like to avoid taking any finance courses if possible.Robert should:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Liberty Electronics wants to predict how much money it can make this coming year.Liberty would benefit from developing a:

Correct AnswerverifiedShow Answer

Inventory financing represents the selling of accounts receivables as collateral for a loan.

Correct AnswerverifiedShow Answer

A less established company,or a company with a high debt to equity ratio would be considered a riskier investment to the lender.Which of the following principles attests to this axiom?

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

A _________ forecast predicts the revenues,costs,and expenses a firm will incur for a period of one year or less.

Correct AnswerverifiedShow Answer

Which of the following statements about taxes is accurate?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Undercapitalization refers to the problem of:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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The two forms of debt financing are 1)se...
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