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 101

Multiple Choice

Review LaterAdd Note

Review Later

Retained earnings are

A) the same as net profit.
B) interest earned on bond investments.
C) nontaxable income.
D) a form of equity financing.
E) the portion of the profit paid to stockholders.

F) D) and E)
G) A) and B)

Correct Answer

verified

Show Answer

Question 102

Multiple Choice

Review LaterAdd Note

Review Later

When would a company be likely to call its preferred stock?

A) If it decides it would rather have corporate bonds
B) When it needs additional long-term financing
C) As the preferred stock matures and must be redeemed
D) When the call premium becomes high enough to justify the call
E) When it can issue new ordinary share to replace the preferred stock

F) A) and E)
G) C) and D)

Correct Answer

verified

Show Answer

Question 103

True/False

Review LaterAdd Note

Although a corporation does not have to pay dividends on ordinary share, it is required to pay dividends on preferred stock.

For a manufacturer, it is impossible to have cash-flow problems before peak sales periods.

Jacob and Molly decide to start a new cake-decorating business.They each contribute €10,000 to get the business off the ground.This money is considered

If a firm's earnings should drop below the interest cost of borrowed money, the return on owners' equity will increase.

Marietta Hotels used a twenty-five-year, €50 million bond issue to finance its expansion.In its plan to ensure that funds would be available to redeem the bonds at maturity, it arranged that none of the bonds would mature during the first fifteen years.Therefore, 10 percent of the bonds mature each year until all the bonds are retired at the end of the twenty-fifth year.This is an example of the ____ method of repayment.

The managers at Bally Manufacturing decided to borrow money to finance a new production facility.The loan agreement they signed required that they pay 10 percent interest on the loan.Based on this information, which of the following statements is true?

An initial public offering occurs anytime that a corporation sells stock to the general public.

Sally Jackson was told that when she sold her corporate bonds she must endorse her bonds before transferring ownership to the new owner.This means that Sally sold

The most expensive form of short-term financing is factoring of accounts receivable.

When each new budget is based on the amounts contained in the budget from the preceding year, a company is using ____ budgeting.

When a seller allows a buyer thirty to sixty days to pay for a purchase, the sales arrangement is called

A cash budget estimates a firm's expenditures for major assets like replacement of obsolete equipment and mergers and acquisitions.

Slater Co.has very old computers and manufacturing equipment and knows it needs to upgrade them or risk losing much of its business.Slater does not have the money to purchase the computers, so it will most likely need

Jones Manufacturing needs €450,000 to build a new plant.It must also spend €200,000 on new equipment for the plant.Both of these needs are examples of

When Platinum Fitness sells its accounts receivable to a financial institution, it receives less than the full value of the accounts receivable.Which of the following is a benefit Platinum Fitness receives from this arrangement?

Jackson Ski Equipment receives an invoice for €10,000 worth of merchandise from one of its suppliers.The invoice has discount terms of 2/10, net/60.Twenty days later, Jackson Ski Equipment writes a check for ____ to pay the invoice.

Interest paid on outstanding bonds is usually paid

LaTisha starts a business called ValueCentral.com, the concept takes off, and the company has an IPO and goes public.The company is growing very rapidly and trying to keep up with customer demand.What type of dividend is this company likely to pay its stockholders?