FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 18: Financial Management

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 81

True/False

Review LaterAdd Note

Review Later

To improve cash flow and profitability,effective managers attempt to minimize the firm's investment in inventory.

Correct Answer

verified

Show Answer

Question 82

Multiple Choice

Review LaterAdd Note

Review Later

The Connecting through Social Media box titled,"Finding Funding Online,"

A) refers newly formed small businesses to the Small Business Administration as the only bona fide source of loans for small businesses.
B) introduces us to peer-to-peer groups like Lendio or Lending Club that may help fulfill the need for funding,the lifeblood of small business.
C) suggests looking into business credit cards for short-term cash,due to the low interest rates on these instruments.
D) develops the history of lending institutions: (beginning with banks and ending with Venture Capitalists) and emphasizes that small business owners have a difficult time finding funds because as a group they are a very small market for financial institutions.They make up a very small percentage (less than 5 percent) of all businesses.

Correct Answer

verified

Show Answer

Question 83

True/False

Review LaterAdd Note

A line of credit represents a guarantee from a bank to lend a firm a given amount of money.

The terms "2/10,net 30" indicate that the seller is offering a 10% discount for early payment.

A term-loan agreement requires the borrower to repay the loan in one lump sum at the end of the loan period.

A financial manager makes recommendations to top executives regarding strategies for improving the financial strength of a firm.

An example of a firm using leverage to its advantage is a firm that borrows funds at 9% and invests those funds to earn 14%.

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." -Mort Tishian feels it's necessary to predict revenues,costs,and expenses on a six-month basis."It's the only way you get an idea of what to expect," explains Mort.In order to obtain these predictions,Mort needs to develop a(n) :

Which of the following shows a firm's spending plans on fixed assets such as large equipment?

What is equity financing? Identify and describe the major sources of equity financing.

Business match their long-term capital needs to:

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

Susan started a cake decorating business that failed.She is convinced that she lacked the necessary funds to promote her business and get it off the ground.Susan experienced:

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

Financial managers at Sasha Deal Electronics have always had a conservative attitude toward long-term financing.In particular,they are interested in keeping risk to a minimum.This philosophy suggests that managers at Sasha Deal consider the extensive use of leverage an attractive financial strategy.

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

The timing of a short-term forecast is more important than the forecast's accuracy.

Ariel,a recent graduate in finance from a well-known university,was hired by a large corporation to work in tax management.Ariel's goal is:

Sound financial management involves determining the most appropriate sources of funds to meet short-term and long-term needs of an organization.

The owner of a Mountain Cycle Shop worries that cash flows may be insufficient to pay his current operating expenses.While he anticipates a surplus of cash inflows as warm weather approaches,he needs to borrow funds now to meet his immediate obligations.He can best resolve his cash flow concerns by obtaining ________ financing.