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Exam 18: Financial Management

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Question 41

Multiple Choice

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To secure financing for a planned expansion,Ohio Electronics borrowed $400,000 from King Finance.The ________ loan agreement requires that Ohio Electronics provide the title to their factory as collateral.

A) recapitalization
B) secured
C) pledged
D) minority

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Question 42

Multiple Choice

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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 serious funding.The handful of seed scientists that own the company are seeking ___________,but understand that they will relinquish a sizeable share of ownership in order to obtain the funds.

A) debenture capital
B) international line of credit
C) leverage
D) venture capital

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Question 43

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Allison O'Toole sells high end accessories at her resort boutique in Destin,FL.During the past ten years,Allison's business has performed quite well.Even when she made the decision to expand her store by purchasing the building next door,she financed this event by reinvesting her profits.Up until now,Allison has:

Money has a time value because:

Long-term financing would normally be used to purchase:

Inadequate expense control typically occurs as a result of undercapitalization.

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 paper work each time Carolina borrows money.The preapproved short-term loan agreement is contingent upon the bank having the funds available.

As a management consultant,Lamont knows that regardless of how good his firm's product might be,the business has little chance of success without a(n) :

Accepting credit cards,such as MasterCard or Visa,enables a firm to decrease the expense of extending credit to customers.

The first step in the financial planning process is:

The chief financial officer of a company is responsible for managing cash,accounts receivable,and inventory.

Based on the time value of money,$100 received a year from today is worth more than $100 received today.

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

Virginia Supply offers their customers trade credit with terms 2/15 net 30.This implies that:

Rod was required to pledge his house and car as collateral for a loan he received from the First National Bank.The money from the loan was used to start his new business,which unfortunately failed within 6 months.The bank can now claim Rod's house and car to satisfy its claim.

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.

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

A _________ represents a long-term debt obligation issued by a corporation or a government.

No matter the size of the business,finance is a critical activity for:

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