Question 1

Efficient cash management requires firms to pay their bills as quickly as possible, and delay the collection of accounts receivable.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

A line of credit from a bank guarantees a firm that a specified amount of financing will be available when it is needed.

Accepted Answer

A) True 
 B)False

Question 4

A revolving credit agreement is designed to reduce the risk of lending money.

Accepted Answer

A) True 
 B)False

Question 5

Leverage refers to the use of borrowed funds to increase a firm's rate of return.

Accepted Answer

A) True 
 B)False

Question 6

Explain the term leverage. When is it more favorable for firms to use this strategy?

Accepted Answer

Leverage is borrowing funds to invest in...

Question 7

The overall objective of financial planning is to optimize the firm's profitability and make the best use of its money.

Accepted Answer

A) True 
 B)False

Question 8

The concept time value of money indicates:

Accepted Answer

A)   the value of a dollar decreases over time as prices increase.
B)   the prices of goods and services will fluctuate over time due to inflation and higher costs of production.
C)   monetary systems tend to become more sophisticated over time.
D)   a dollar received today is worth more than a dollar received a year from today.E) A) and B)
F) B) and D)

Question 9

To reduce the time and expense of collecting their accounts receivable, some firms:

Accepted Answer

A)   extend credit to new customers.
B)   offer extended payment plans to existing customers.
C)   adopt a just-in-time inventory policy.
D)   accept bank credit cards.E) None of the above
F) B) and C)

Question 10

In order to assist in revenue realization, a(n)  ________ allocates resources throughout the firm

Accepted Answer

A)   forecast
B)   balance sheet
C)   budget
D)   income statementE) None of the above
F) All of the above

Question 11

Chunky Chicken, Inc., announced yesterday that it plans to issue $100 million in debenture bonds to fund the expansion of its fast food chain of restaurants. In financial terms, this means:

Accepted Answer

A)   the corporation will borrow $100 million worth of long-term financing. The bond issue will not carry any collateral.
B)   the corporation will issue $100 million worth of equity financing. The bond issue will be backed by the property and buildings purchased with the funds.
C)   the corporation will borrow $100 million worth of long-term financing. The issue will be backed by the property and buildings purchased with the funds.
D)   the corporation will issue $100 million worth of interest-free bonds. Financiers will be paid from the revenues created by the individual franchises.E) C) and D)
F) B) and C)

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

After thoroughly studying the feasibility for expansion, Preferred Pet Care Inc., a mobile pet care company that operates in the greater Chicago area, plans to offer a similar service in the Indianapolis metropolitan area. This endeavor will require a large capital expenditure. Due to the nature of this project, the firm will consider only equity financing.

Accepted Answer

A) True 
 B)False

Question 14

Which business function involves credit management/collecting funds from customers?

Accepted Answer

A)   Accounting
B)   Production
C)   Marketing
D)   FinanceE) B) and D)
F) B) and C)

Question 15

As a financial manager, Sabrina's responsibilities include the interpretation of financial statements provided by the firm's accountants and the preparation of recommendations to top management.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following represents a capital expenditure?

Accepted Answer

A)   issuing paychecks to workers
B)   paying for advertising on a local radio station
C)   purchasing raw materials to be used in the production of a firm's product
D)   purchasing a building to be used for office spaceE) C) and D)
F) A) and B)

Question 17

If a buyer is offered the terms of sale of "3/10, net 30" this means that the buyer can receive a 10 percent discount by making full payment within 30 days of the billing date.

Accepted Answer

A) True 
 B)False

Question 18

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:

Accepted Answer

A)   to prepare the company's tax returns.
B)   to develop ways to increase taxes in order to enhance the bottom line.
C)   to minimize the firm's tax consequences.
D)   to be the firm's tax collector.E) B) and D)
F) A) and D)

Question 19

A debenture bond is backed only by the reputation of the issuer.

Accepted Answer

A) True 
 B)False

Question 20

Family and friends represent problem-free sources of financing for most small businesses.

Accepted Answer

A) True 
 B)False

Exam 18: Financial Management

Family and friends represent problem-free sources of financing for most small businesses.

Correct Answer
verified

Leverage refers to the use of borrowed funds to increase a firm's rate of return.

Correct Answer
verified

A debenture bond is backed only by the reputation of the issuer.

Correct Answer
verified

Explain the term leverage. When is it more favorable for firms to use this strategy?

Correct Answer
verified
Leverage is borrowing funds to invest in...
View Answer

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

Correct Answer
verified

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

Correct Answer
verified

A line of credit from a bank guarantees a firm that a specified amount of financing will be available when it is needed.

Correct Answer
verified

In order to assist in revenue realization, a(n) ________ allocates resources throughout the firm

Correct Answer
verified

The concept time value of money indicates:

Correct Answer
verified

Chunky Chicken, Inc., announced yesterday that it plans to issue $100 million in debenture bonds to fund the expansion of its fast food chain of restaurants. In financial terms, this means:

Correct Answer
verified

Which of the following represents a capital expenditure?

Correct Answer
verified

To reduce the time and expense of collecting their accounts receivable, some firms:

Correct Answer
verified

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:

Correct Answer
verified

Efficient cash management requires firms to pay their bills as quickly as possible, and delay the collection of accounts receivable.

Correct Answer
verified

As a financial manager, Sabrina's responsibilities include the interpretation of financial statements provided by the firm's accountants and the preparation of recommendations to top management.

Correct Answer
verified

Correct Answer
verified

If a buyer is offered the terms of sale of "3/10, net 30" this means that the buyer can receive a 10 percent discount by making full payment within 30 days of the billing date.

Correct Answer
verified

The overall objective of financial planning is to optimize the firm's profitability and make the best use of its money.

Correct Answer
verified

A revolving credit agreement is designed to reduce the risk of lending money.

Correct Answer
verified

Which business function involves credit management/collecting funds from customers?

Correct Answer
verified

Exam 18: Financial Management

Family and friends represent problem-free sources of financing for most small businesses.

Correct AnswerverifiedShow Answer

Leverage refers to the use of borrowed funds to increase a firm's rate of return.

Correct AnswerverifiedShow Answer

A debenture bond is backed only by the reputation of the issuer.

Correct AnswerverifiedShow Answer

Explain the term leverage. When is it more favorable for firms to use this strategy?

Correct AnswerverifiedLeverage is borrowing funds to invest in...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A line of credit from a bank guarantees a firm that a specified amount of financing will be available when it is needed.

Correct AnswerverifiedShow Answer

In order to assist in revenue realization, a(n) ________ allocates resources throughout the firm

Correct AnswerverifiedShow Answer

The concept time value of money indicates:

Correct AnswerverifiedShow Answer

Chunky Chicken, Inc., announced yesterday that it plans to issue $100 million in debenture bonds to fund the expansion of its fast food chain of restaurants. In financial terms, this means:

Correct AnswerverifiedShow Answer

Which of the following represents a capital expenditure?

Correct AnswerverifiedShow Answer

To reduce the time and expense of collecting their accounts receivable, some firms:

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

Efficient cash management requires firms to pay their bills as quickly as possible, and delay the collection of accounts receivable.

Correct AnswerverifiedShow Answer

As a financial manager, Sabrina's responsibilities include the interpretation of financial statements provided by the firm's accountants and the preparation of recommendations to top management.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a buyer is offered the terms of sale of "3/10, net 30" this means that the buyer can receive a 10 percent discount by making full payment within 30 days of the billing date.

Correct AnswerverifiedShow Answer

The overall objective of financial planning is to optimize the firm's profitability and make the best use of its money.

Correct AnswerverifiedShow Answer

A revolving credit agreement is designed to reduce the risk of lending money.

Correct AnswerverifiedShow Answer

Which business function involves credit management/collecting funds from customers?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified
Leverage is borrowing funds to invest in...
View Answer

Correct Answer
verified

Correct Answer
verified

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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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