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Exam 18: Financial Management

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Question 51

Multiple Choice

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

A) debt
B) equity
C) retained earnings
D) commitment

E) None of the above
F) B) and D)

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Question 52

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An unsecured loan does not require a borrower to provide collateral to secure a loan.

A) True
B) False

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Question 53

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What is financial management? Identify the duties and responsibilities of financial managers.

Factoring refers to the process of selling accounts receivable for cash.

Ivy has always loved designing and tending to gardens, and now she's a master gardener in charge at a large botanical garden. Ivy requires her staff to pursue continuing education and, because it's an area where she is weak, she is enrolling in two courses-accounting and finance-at the local community college. This is a good plan, especially since she is the boss.

An effective strategy to manage cash flows requires retail businesses to eliminate their inventory.

Which of these is a common source of long-term financing for a corporation?

Identify and describe the major steps involved in financial planning.

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

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

Investors and entrepreneurs should have an understanding of financial issues.

As a finance manager at Outdoor Adventure Sporting Goods, Roman worries about the firm's borrowing requirements for the upcoming year. He knows the benefit of estimating the company's cash disbursements and short-term investment expectations. Facing these concerns, a(n) ________ would provide Roman with valuable information by providing a good estimation of whether the firm will need to do short-term borrowing.

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

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

By selling shares of ownership in their company, Seattle Scientific acquires the funds needed to finance their research and development projects. Seattle Scientific provides for their long-term funding needs through ________ financing.

Which of the following shows a firm's spending plans on fixed assets such as large equipment?

The chief financial officer of a company is responsible for managing cash, accounts receivable, and inventory.

To maximize the benefits of using financial leverage, a firm should

Which of the following presents an effective technique to improve cash management?

Acquiring funds through debt financing actually decreases the overall risk of the firm.