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Exam 18: Financial Management

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Question 111

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Which of the following activities is most likely to be performed by a financial manager?

A) design of a marketable product that satisfies an unmet need
B) identification of specific target markets for a firm's goods
C) preparation of the balance sheet and income statement for the firm
D) analysis of the tax implications of various managerial decisions

E) None of the above
F) A) and C)

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Question 112

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Financial managers are responsible for buying merchandise on credit and collecting payment from accounts receivable.

A) True
B) False

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Question 113

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Tri-State Concrete Construction Company relies on factoring to meet its short-term financing needs. This means that Tri-State borrows money from a finance company and pledges its accounts receivable as collateral.

________ 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

A just-in-time inventory system allows a firm to:

The interest paid on ________ represents a tax-deductible business expense

Financial managers are responsible for budgeting, auditing, and advising top management on financial matters.

Long-term loans are often more expensive than short-term loans.

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

As the chief financial officer (CFO) for a medium-sized service company, Shelley is concerned about the possibility of temporary cash shortages. Given the irregular cash flows from seasonal sales, she wants to ensure that her company's bank will provide adequate funds to cover any potential cash flow problem. The best strategy to ease Shelley's concern would be to arrange a revolving credit agreement with the bank.

The first step in the financial planning process is:

An operating budget analyzes the firm's spending plans for long-lasting assets that require large sums of money.

The financial manager of Carolina Graphics negotiated a ________ with her bank that allows Carolina to borrow up to $50,000 without collateral. This arrangement eliminates the need to renegotiate the terms of the loan and complete new paperwork each time Carolina borrows money. The preapproved short-term loan agreement is contingent upon the bank having the funds available

Central Vermont Power issued $200 million of bonds to finance a major upgrade of one of its largest power plants. The issuance of these bonds indicates that Central Vermont utilizes equity capital to meet its long-term financing needs.

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.

Finance managers spend the majority of their time managing _____

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

An unsecured loan does not require a borrower to provide collateral to secure a loan.

If you are at the Phoenix Sky Harbor International Airport, you will no longer get a pat-down if you go through the metal detector. The airport now has full body screening ports that scan the entire body and readily detect weapons or explosive devices that someone may want to take on board a plane. These expensive devices represent:

Financial control is a process where firms compare actual revenues and costs with budgeted revenues and costs.