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Exam 18: Financial Management

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Question 31

Multiple Choice

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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:

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.

E) A) and B)
F) A) and C)

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Question 32

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Expansion into new markets either domestic or global)is sometimes financed with long-term funds.

A) True
B) False

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Question 33

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Which of the following commonly results in the financial failure of a firm?

________ is a form of short-term financing.Businesses buy merchandise from their suppliers,but are not required to pay for their purchases until some future date.

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

One important consideration for a firm accepting funds from a venture capitalist is the ownership interest demanded by the venture capital firm.

Funds obtained from venture capitalists are considered equity financing.

Since short-term financial forecasts predict expected future events,they should not be influenced by recent financial statements.

Short-term financing refers to borrowed funds that must be repaid in a year or less.

___________ refers to the process that identifies variances by comparing actual revenues and expenses to projected revenues and expenses.

A firm will choose to seek debt financing only for the purpose of paying for short-term operating needs.

In the Legal Briefcase box titled,"Financial Order or Financial Martial Law?" students are introduced to ____________________ assigned by governors to establish financial procedures to secure the health of local and state governments.This type of procedure was put in place in Michigan during the last recession

A company's capital budget helps management plan for cash shortages or surpluses.

Commercial finance companies normally charge lower rates on short-term loans than those charged by commercial banks.

The main objective of financial control is to establish priorities for the purchase of plant and equipment.

Financially stable firms are able to sell commercial paper to raise short-term funds.

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.

__________ provide financing to new or emerging companies with high profit potential.In return,these organizations expect a share of ownership in the company.

Factoring refers to the process of selling accounts receivable for cash.

With added competition,firms prefer not to offer the availability of credit sales to their customers.