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Exam 18: Financial Management

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Question 91

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If a firm earns 10% return on funds they borrowed at 15% interest,the owners of the firm realize a benefit from using leverage.

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Question 92

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

A) forecast
B) balance sheet
C) budget
D) income statement

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Question 93

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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.

Sarah intends to major in finance and find employment in corporate financial management.As a finance major,Sarah will discover her ________ knowledge to be valuable in mastering the objectives of her finance classes.

Inadequate control of expenses represents a common financial problem that contributes to business failure.

A secured loan means the borrower has the security of knowing repayment is not due for several years.

Carolina Financial Services is considering the purchase and installation of an expensive computer network.This is the type of expenditure that would be included in a(n) :

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 only consider equity financing.

A(n) _____________ job includes forecasting,budgeting,cash flow analysis,cost control,taxes,and credit management.

Forecasting means determining how closely the actual revenue and expense results matched up with the predicted revenues and expenses.

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

Karen,a financial manager with Bigbux Incorporated,regularly compares actual revenues and expenses against their projected values.After identifying areas with significant deviations from planned values,she investigates to find the cause of these variances.Karen's activities represent the steps involved in the preparation of Bigbux's capital budget.

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

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

White Palace operates a chain of restaurants specializing in hamburgers.The corporation plans to expand to new communities.The acquisition of land and construction of new restaurants represent major capital expenditures.

Arborview Plant Science Company has invented a drought resistant grass seed that only needs watering three times each year.In order to expand distribution world wide,the company whose product produces lush green foliage needs a large amount of funding - fast! The handful of seed scientists that own the company decides to offer shares of stock to general investors.This first-time offering is a(n) :

Which of the following companies is undercapitalized?

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

Most companies have the ready cash available to make large purchases.

Which of these is backed only by the reputation of the issuer?