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Exam 16: Mastering Financial Management

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Question 71

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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

A) equity-capital needs.
B) debt-capital needs.
C) short-term financing needs.
D) long-term financing needs.
E) cash-flow problems.

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

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Question 72

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Are there any risks for a corporation that uses long-term debt financing? Support your answer.

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Yes, there are risks for a corporation t...

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Question 73

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Collateral is not required for most short-term financing.

Morgan's Transition Morgan is currently a manager of a small financial planning firm.He is seeking a new career with a large corporation in the banking industry.He recently applied for the financial manager opening at G & T Bank.He is concerned that the transition from his small firm to a large corporation will be difficult.To better prepare himself for this change, he has decided to enroll in a few business classes to strengthen his understanding of corporate finance.The business classes have proven to be a valuable tool for learning the critical skills needed to fully understand a financial plan, equity financing, and debt financing.Morgan now believes he has strengthened his competitive advantage in his quest for the job. -Refer to Morgan's Transition.When Morgan has to counsel clients on short-term versus long-term financing needs, which of the following should he identify as a short-term financing need?

What is a budget? How is it used by a business firm?

The assets most commonly used as collateral for short-term financing include

When a small-business owner applies for a loan, the bank officer will

Specific statements detailing what an organization intends to accomplish within a certain period of time are called _____.

In the ____, Kia Corporation describes the basics of the bond issue, who the trustee is, when the bonds mature, and how the bonds will be paid off.

Effective financial management involves careful planning to determine the best financial sources and to ensure that projected uses are in keeping with the organization's goals.

John Martin and Bob Johnston want to start a small manufacturing business.To obtain the financing they need, they decide to sell stock to their friends.The sale of stock is _____.

Which of the following companies would most likely be able to issue commercial paper?

The type of corporate ownership that has first claim on profits and assets is called a _____.

The greatest part of a firm's financing is provided by _____.

A tool that managers use to estimate major expenditures for assets, expansion of facilities, and mergers and acquisitions is called a(n) _____.

A corporation selling stock often will use

The date on which the corporation is to repay the borrowed money is called the _____.

For a corporation, equity capital is provided by _____.

Bonds that are secured by various assets of the issuing corporation are called debenture bonds.

All of the activities concerned with obtaining money and using it effectively are called _____.