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Exam 18: Financial Management

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Question 121

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The budget that estimates a firm's projected cash inflows and outflows,as well as cash shortages or surpluses during a given time period is called the ________ budget.

A) capital
B) operating
C) cash
D) monetary

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

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Question 122

Multiple Choice

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The effective management of accounts receivable requires financial managers to:

A) review the credit history of new customers.
B) provide prompt cash payments to suppliers.
C) allow customers more time in paying their past due accounts.
D) refuse bank-issued credit cards.

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

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Question 123

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Which of the following organizations would be most likely to acquire short-term funding by issuing commercial paper?

To raise the funds for the major improvements needed at the funeral home,Mort has talked to two investors about incorporating his business and selling them shares of stock in the company.Mort is considering the use of:

Money has a time value because:

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

The managers of Dakota Clothing regularly compare their actual profits with the firm's projected profits.When deviations occur,the managers use the feedback to take corrective action when necessary.The management of Dakota Clothing is exercising financial:

________ examine the data prepared by ________ and then make recommendations to top management regarding strategies for improving the firm.

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.

Finance is the function in a business that acquires funds for the firm and manages those funds within the firm.

An effective budget requires:

The finance manager at AllSports Communication has asked his assistant,Ben,to prepare the ________ budget.Ben will gather as much information as possible by utilizing the firm's other budgets and any documents that summarize proposed financial activities.

Most companies require long-term capital to purchase fixed assets such as plant and equipment,to develop new products and services,or to finance an expansion.

One step in the financial planning process is to establish financial control procedures that allow managers to monitor the organization's performance.

A loan backed by collateral represents an) :

When using equity financing,firms incur a legal obligation to repay the amount of money invested.

A firm negotiates an) _________ with its bank.This arrangement gives the firm access to a specified amount of unsecured short-term funds,provided the bank has the funds available.

One of the challenges of effective financial management is:

Identify and describe three types of short-term financing.

Efficient cash management requires firms to pay their bills as quickly as possible,and delay the collection of accounts receivable.