Question 1

As John considers approaching a venture capital firm to provide funding for his new software firm,he should realize that a venture capital firm will:

Accepted Answer

A)   offer no more than 20 percent of the funding he needs.
B)   charge a higher interest rate than a commercial bank.
C)   expect the company to provide a steady dividend income.
D)   probably want an ownership interest in the business.

Question 2

The most widely used source of short-term funding is trade credit.

Accepted Answer

A) True 
 B)False

Question 3

By identifying variances from the financial plan,managers are able to focus on those departments that require corrective action.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

The CFO of a well known 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

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

Accepted Answer

A) True 
 B)False

Question 7

Mini-Case
Tishian's Funeral Home has been in business for over eighty years.Throughout its history,the firm has been a family-run operation.Today,the business is managed by Mort Tishian,a grandson of the founder.Unfortunately,Mort Tishian's tenure has been plagued with problems neither his father nor grandfather before him experienced.The reason is simple: the funeral business is undergoing rapid change.Small,family-owned funeral homes are losing ground to a new type of competitor,a large national network service that resembles a franchise system.More and more families "in their time of need" are choosing the new,highly promoted competitors instead of the traditional small family-operated funeral homes.
This trend has required a response from organizations like Tishian's Funeral Home.Bigger and better facilities are needed to remain competitive.All of this puts more pressure on the family-owners to be more active in the financial side of the business.Mort summed it up best when he said,"Grandpa told people,'you pay me when you can,I ain't goin' nowheres.'" His creditors did the same with him.Today,it's a different game.Cash flow is key,and obtaining funds is no simple task.Additionally,creditors want their money now,not later.Banks are also more demanding."Heck,Grandpa knew all the bankers he dealt with personally.I see new faces every time I go to the bank.If things don't get better,I suspect after eighty years of service,Tishian's Funeral Home will have its own funeral."
-After seeing Mort's advertisement: "You Aren't Gettin' Any Younger! Start Planning for Heaven Today!" a(n) ___________ firm decided the aging population was a good investment.Although they typically look at start-ups with great promise,they approached Mort with $6 million dollars for a major three-city expansion that included six new funeral homes,a crematory,and mausoleum.After researching the idea,Mort agreed to give-up 50% ownership of the business in order to secure these funds.His last thoughts as he began to sign the papers were: "Now,I'll be able to compete with the big guys!"

Accepted Answer

A)   retained earnings
B)   indentured
C)   venture capital
D)   leveraged buyout

Question 8

A comptroller is the chief accounting officer of an organization.

Accepted Answer

A) True 
 B)False

Question 9

A _________ forecast predicts the future cash inflows and outflows in future periods.

Accepted Answer

A)   money based
B)   short-term
C)   cash flow
D)   long-term

Question 10

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

Accepted Answer

A)   A revolving credit agreement
B)   Commercial paper
C)   A bond issue
D)   Trade credit

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

If a company secures a three year bank loan,it is considered _________.

Accepted Answer

A)   short-term financing
B)   asset funding
C)   liability funding
D)   long-term financing

Question 13

A share of stock represents a company-issued IOU including a promise to repay on a certain date.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following activities is most likely to be performed by a financial manager?

Accepted Answer

A)   Design of a marketable product that satisfies an unmet need
B)   Identification of specific target markets for a firm's goods
C)   Preparation of the balance sheet and income statement for the firm
D)   Analysis of the tax implications of various managerial decisions

Question 15

Which of the following statements is most accurate?

Accepted Answer

A)   Accounting and finance are not related.
B)   Financial managers keep the books for a firm.
C)   Financial managers need to understand accounting.
D)   Nonprofit organizations must choose between accounting and finance.

Question 16

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.

Accepted Answer

A)   market prediction
B)   financial forecast
C)   budget
D)   cash flow analysis

Question 17

Equity financing must be repaid.

Accepted Answer

A) True 
 B)False

Question 18

Green Builder's Supply,Inc.does not offer customers a cash discount for early payment of their accounts receivable.As a result,most customers wait to pay their bill on the last day before late penalties are charged.These customers apparently understand the:

Accepted Answer

A)   time value of money.
B)   benefits of tax-deductible expenses.
C)   financial community's perception of equity financing.
D)   government's regulations of the chemical industry.

Question 19

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.

Question 20

A budget reflects management's expectations for revenues and allocates the use of specific resources throughout the firm.

Accepted Answer

A) True 
 B)False

Exam 18: Financial Management

Correct Answer
verified

Correct Answer
verified

Which of the following statements is most accurate?

Correct Answer
verified

A _________ forecast predicts the future cash inflows and outflows in future periods.

Correct Answer
verified

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

Correct Answer
verified

If a company secures a three year bank loan,it is considered _________.

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 activities is most likely to be performed by a financial manager?

Correct Answer
verified

A comptroller is the chief accounting officer of an organization.

Correct Answer
verified

As John considers approaching a venture capital firm to provide funding for his new software firm,he should realize that a venture capital firm will:

Correct Answer
verified

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

Correct Answer
verified

The most widely used source of short-term funding is trade credit.

Correct Answer
verified

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.

Correct Answer
verified

A share of stock represents a company-issued IOU including a promise to repay on a certain date.

Correct Answer
verified

Equity financing must be repaid.

Correct Answer
verified

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

Correct Answer
verified

By identifying variances from the financial plan,managers are able to focus on those departments that require corrective action.

Correct Answer
verified

Green Builder's Supply,Inc.does not offer customers a cash discount for early payment of their accounts receivable.As a result,most customers wait to pay their bill on the last day before late penalties are charged.These customers apparently understand the:

Correct Answer
verified

A budget reflects management's expectations for revenues and allocates the use of specific resources throughout the firm.

Correct Answer
verified

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

Correct Answer
verified

Exam 18: Financial Management

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is most accurate?

Correct AnswerverifiedShow Answer

A _________ forecast predicts the future cash inflows and outflows in future periods.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a company secures a three year bank loan,it is considered _________.

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 activities is most likely to be performed by a financial manager?

Correct AnswerverifiedShow Answer

A comptroller is the chief accounting officer of an organization.

Correct AnswerverifiedShow Answer

As John considers approaching a venture capital firm to provide funding for his new software firm,he should realize that a venture capital firm will:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The most widely used source of short-term funding is trade credit.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

A share of stock represents a company-issued IOU including a promise to repay on a certain date.

Correct AnswerverifiedShow Answer

Equity financing must be repaid.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

By identifying variances from the financial plan,managers are able to focus on those departments that require corrective action.

Correct AnswerverifiedShow Answer

Green Builder's Supply,Inc.does not offer customers a cash discount for early payment of their accounts receivable.As a result,most customers wait to pay their bill on the last day before late penalties are charged.These customers apparently understand the:

Correct AnswerverifiedShow Answer

A budget reflects management's expectations for revenues and allocates the use of specific resources throughout the firm.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified