Question 1

One of the challenges of effective financial management is

Accepted Answer

A)   to have sufficient cash on hand without compromising the firm's investment potential.
B)   ensuring the satisfaction of each of the stakeholder groups.
C)   working within the strict regulations of the Financial Accounting Standards Board (FAS
B)  .
D)   providing the financial data in a timely manner for management consultants to improve decision making.

Question 2

A(n)  ________ is responsible for verifying that the accounting procedures within a firm are consistent with established accounting principles.

Accepted Answer

A)   managerial accountant
B)   tax accountant
C)   bookkeeper
D)   internal auditor

Question 3

Financial managers are responsible for controlling cash flows.

Accepted Answer

A) True 
 B)False

Question 4

Long-term loans are often more expensive than short-term loans.

Accepted Answer

A) True 
 B)False

Question 5

The CFO of a satellite radio company was trying to work his magic today as he solicited another telecommunications/entertainment company to invest in his company in order to prevent bankruptcy. Having refinanced the company less than a year ago, the satellite radio finance manager had a $75 million note coming due today. The current financing arrangement represents

Accepted Answer

A)   a long-term sale of stock to private investors.
B)   short-term debt financing.
C)   the issuance of long-term bonds.
D)   a leveraged buy-out.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Inventory financing represents the selling of accounts receivables as collateral for a loan.

Accepted Answer

A) True 
 B)False

Question 8

The chief financial officer (CFO) is responsible for accounting and financial functions.

Accepted Answer

A) True 
 B)False

Question 9

Equity financing must be repaid.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following situations represents a successful use of financial leverage?

Accepted Answer

A)   A firm issues new shares of stock and uses the proceeds from the sale to retire its outstanding debt.
B)   A firm borrows money at 8% and earns an 11% return on its investment of these funds.
C)   A firm attracts the interest of two venture capitalists and plays one against the other to gain the best deal.
D)   A retail firm purchases merchandise at $10 and sells it for $15.

Question 11

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.

Question 12

Venture capital is money that is invested in new or emerging companies that are perceived as having great profit potential.

Accepted Answer

A) True 
 B)False

Question 13

Since commercial finance companies offer loans to higher-risk customers than commercial banks, the interest rates they charge are usually ________ than rates charged by banks.

Accepted Answer

A)   higher
B)   lower
C)   more predictable
D)   subject to lower taxes

Question 14

One of the most common ways for a firm to fail financially is poor control over cash flow.

Accepted Answer

A) True 
 B)False

Question 15

One of the primary factors that influences the interest rate a firm pays on long-term loans is the

Accepted Answer

A)   intensity of competition the firm faces with new products.
B)   current level of government regulations.
C)   general level of market interest rates.
D)   exchange rate of the euro to the U.S. dollar.

Question 16

Although best used as a last resort, many small businesses find it convenient to use ________ as a short-term source of financing. Although this form of short-term debt comes with high interest rates, it provides a quick line of credit for many firms, including start-up companies who may not be able to secure bank loans.

Accepted Answer

A)   factoring
B)   credit cards
C)   commercial paper
D)   promissory notes

Question 17

A ________ forecast predicts the revenues, costs, and expenses a firm will incur for a period of one year or less.

Accepted Answer

A)   near-horizon
B)   short-term
C)   capital expenditures
D)   tactical

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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 20

Trade credit represents one of the most expensive forms of short-term financing.

Accepted Answer

A) True 
 B)False

Exam 18: Financial Management

Long-term loans are often more expensive than short-term loans.

Correct Answer
verified

The chief financial officer (CFO) is responsible for accounting and financial functions.

Correct Answer
verified

The concept time value of money indicates

Correct Answer
verified

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

Correct Answer
verified

Which of the following situations represents a successful use of financial leverage?

Correct Answer
verified

One of the most common ways for a firm to fail financially is poor control over cash flow.

Correct Answer
verified

Correct Answer
verified

One of the challenges of effective financial management is

Correct Answer
verified

A(n) ________ is responsible for verifying that the accounting procedures within a firm are consistent with established accounting principles.

Correct Answer
verified

Venture capital is money that is invested in new or emerging companies that are perceived as having great profit potential.

Correct Answer
verified

Equity financing must be repaid.

Correct Answer
verified

Since commercial finance companies offer loans to higher-risk customers than commercial banks, the interest rates they charge are usually ________ than rates charged by banks.

Correct Answer
verified

Financial managers are responsible for controlling cash flows.

Correct Answer
verified

Correct Answer
verified

One of the primary factors that influences the interest rate a firm pays on long-term loans is the

Correct Answer
verified

Inventory financing represents the selling of accounts receivables as collateral for a loan.

Correct Answer
verified

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

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

Trade credit represents one of the most expensive forms of short-term financing.

Correct Answer
verified

A ________ forecast predicts the revenues, costs, and expenses a firm will incur for a period of one year or less.

Correct Answer
verified

Exam 18: Financial Management

Long-term loans are often more expensive than short-term loans.

Correct AnswerverifiedShow Answer

The chief financial officer (CFO) is responsible for accounting and financial functions.

Correct AnswerverifiedShow Answer

The concept time value of money indicates

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following situations represents a successful use of financial leverage?

Correct AnswerverifiedShow Answer

One of the most common ways for a firm to fail financially is poor control over cash flow.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

One of the challenges of effective financial management is

Correct AnswerverifiedShow Answer

A(n) ________ is responsible for verifying that the accounting procedures within a firm are consistent with established accounting principles.

Correct AnswerverifiedShow Answer

Venture capital is money that is invested in new or emerging companies that are perceived as having great profit potential.

Correct AnswerverifiedShow Answer

Equity financing must be repaid.

Correct AnswerverifiedShow Answer

Since commercial finance companies offer loans to higher-risk customers than commercial banks, the interest rates they charge are usually ________ than rates charged by banks.

Correct AnswerverifiedShow Answer

Financial managers are responsible for controlling cash flows.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

One of the primary factors that influences the interest rate a firm pays on long-term loans is the

Correct AnswerverifiedShow Answer

Inventory financing represents the selling of accounts receivables as collateral for a loan.

Correct AnswerverifiedShow Answer

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

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

Trade credit represents one of the most expensive forms of short-term financing.

Correct AnswerverifiedShow Answer

A ________ forecast predicts the revenues, costs, and expenses a firm will incur for a period of one year or less.

Correct AnswerverifiedShow Answer

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