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Exam 18: Financial Management

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Question 111

Multiple Choice

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

A) Accounting and finance
B) Marketing and finance
C) Production and accounting
D) Finance and research and development

E) All of the above
F) A) and C)

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Question 112

True/False

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Allison Robards,owner of Backstreet Books,an eclectic bookstore near a large university,is seeking additional financing for books and CDs that she plans to buy and sell in the same fiscal year.Even though it will be a sizeable investment in inventory,Allison is seeking short-term financing.

A) True
B) False

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Question 113

True/False

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Financial management is more important for a large firm than it is for a small firm.

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

A revolving credit agreement represents a line of credit that is guaranteed.

Generally accepted accounting principles require that any assessment of a firm's financial statements be performed by independent outside auditors.

Vitale Jewelers obtains needed short-term funds by selling its accounts receivable to the Friendly Finance Company.Friendly Finance usually pays Vitale about 80% of the value of the receivables.Vitale Jewelers utilizes ________ as a means of raising short-term funds.

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

Ariel,a recent graduate in finance from a well-known university,was hired by a large corporation to work in tax management.Ariel's goal is:

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

Mort approached the chief lending officer at First Virginia Bank about obtaining a $75,000 loan.The banker said she would approve the loan provided that the funeral home's building was pledged as collateral.The banker was offering an) :

Budgets assist managers in performing the functions of planning and control.

Akiko realizes the importance of developing a ________ for her interior design business.Akiko understands the importance of appropriately allocating resources in order to achieve the goals of her firm.

A budget's primary purpose is to provide managers with a financial summary of past operations.

Susan started a cake decorating business that failed.She is convinced that she lacked the necessary funds to promote her business and get it off the ground.Susan experienced:

Some suppliers hesitate to offer trade credit to firms with a poor credit history.In these cases,the supplier may insist that the customer sign an) :

Backstreet Books is seeking financing to fund the opening of two more locations in a major university town.There is no need to consider debt financing for this project.It will require a sizeable investment in equity funds.

Which of the following statements is most accurate?

According to an article on STLToday.com,"Anheuser Busch-InBev's tougher line toward suppliers has drawn fire.The U.S.division is losing some suppliers who can't adjust to the company's new policy of taking as long as 120 days to pay bills.Before the InBev takeover,Anheuser-Busch paid many of its accounts in 30 days." This news refers to the brewer's __________ policies.

Inadequate expense control typically occurs as a result of undercapitalization.