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Exam 18: Financial Management

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Question 111

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Retained earnings represent a source of equity financing.

A) True
B) False

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Question 112

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As a result of cash flow shortages,Millard's Department Stores has fallen behind in payments to suppliers.Some suppliers are withholding shipments to Millard's until they receive payments on overdue accounts.To meet their immediate needs,Millard's Department Stores should utilize:

A) vulture capital.
B) long-term financing.
C) contingency capital.
D) short-term financing.

E) B) and D)
F) B) and C)

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Question 113

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A line of credit from a bank guarantees a firm that a specified amount of financing will be available when it is needed.

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

An unsecured corporate bond is known as a debenture bond.

Organizations can avoid financial difficulties by marketing products that generate a significant rate of growth in sales revenue.

Suppliers prefer to offer trade credit to customers with poor credit ratings or no credit history.

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

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

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

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.

While firms finance their long-term needs with debt financing,their short-term needs are served by equity financing.

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

Leverage refers to the use of borrowed funds to increase a firm's rate of return.

As a financial manager for a large manufacturing firm,Gail evaluates the purchase of expensive machinery and construction of new facilities.She is analyzing capital expenditure proposals.

A ________ refers to a line of credit that is guaranteed by the bank.

Acquiring funds through equity financing requires the firm to pay annual dividends.

The types of organizations who can issue bonds are privately and publicly held corporations,exclusively.

The concept,"time value of money" indicates:

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