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Exam 18: Financial Management

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Question 141

True/False

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Trade credit is the practice of buying goods now and paying for them later.

A) True
B) False

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Question 142

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

A) True
B) False

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Question 143

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Money has a time value because:

A comptroller is the chief accounting officer of an organization.

According to the risk/return trade-off,the higher the risk,the lower the interest rate charged by the lender.

Most small businesses are unable to secure long-term financing.

Acquiring funds through borrowing represents:

Corporations must comply with the Securities and Exchange Commission (SEC)requirements in order to sell their stock publicly.

Is there something in a name? April Gardner was told that she would grow-up to be a "master gardener".She didn't really believe that stuff,but now she finds herself in charge at a large city-owned botanical garden.She is requiring her staff to pursue continuing education.To put her money where her mouth is,she will enroll in a couple of accounting and finance courses at the local community college because this is an area where she is weak.This is a good plan - especially since she is the boss.

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:

The terms "2/10,net 30" indicate that the seller is offering a 10% discount for early payment.

Financial managers are responsible for buying merchandise on credit and collecting payment from accounts receivable.

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

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.

The rate of return a company must earn to meet the demands of its lenders and expectations of its equity holders is called:

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

Finance managers spend the majority of their time managing _____.

The long-term financial forecast plays a crucial part in the company's long-term strategic plan.

A _________ represents a long-term debt obligation issued by a corporation or a government.

Funds obtained from venture capitalists are considered equity financing.