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Exam 18: Financial Management

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Question 91

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A bond represents a long-term debt obligation of a corporation or government.

A) True
B) False

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Question 92

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To improve cash flow and profitability,effective managers attempt to minimize the firm's investment in inventory.

A) True
B) False

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Question 93

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

__________ 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.

When Liberty Industries renegotiated their loan agreement,they borrowed an additional $2 million.The new loan requires Liberty to repay the new amount in nine months.Liberty's activity represents ________ financing.

Forecasting means determining how closely the actual revenue and expense results matched up with the predicted revenues and expenses.

The indenture terms refer to the agreements of a bond issue,such as how much interest it promises to pay and when it promises to repay the issue.

In 2009,it was rumored that the previous owners of Skype the internet calling service) ,were interested in buying it back from its current owner,eBay.The two entrepreneurs were said to be soliciting others who wanted to join them in the private ownership of this company.If they are successful in funding the venture in this way,the purchase of Skype would be financed with __________.

__________ refers to the strategy of using borrowed funds to increase the rate of return for stockholders.

Identify and describe the major steps involved in financial planning.

Factoring represents the least expensive way for a firm to raise short-term funds.

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.

To secure financing for a planned expansion,Ohio Electronics borrowed $400,000 from King Finance.The ________ loan agreement requires that Ohio Electronics provide the title to their factory as collateral.

An operating budget analyzes the firm's spending plans for long-lasting assets that require large sums of money.

What is equity financing? Identify and describe the major sources of equity financing.

A line of credit represents a guarantee from a bank to lend a firm a given amount of money.

A firm's short-term financial forecast provides a projected sales estimate.

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.

Financial control is a process where firms compare actual revenues and costs with budgeted revenues and costs.

_____________ is the function in business that is responsible for acquiring funds for the firm,and managing funds within the firm.