Question 1

Assume you are a small retailer selling women's fashions. What actions can you take to build a credit relationship with a manufacturer or wholesaler to ensure that you can use trade credit to purchase needed inventory for your store?

Accepted Answer

As a small retailer selling women's fash...

Question 2

The steps in effective financial planning are

Accepted Answer

A)   establishing organizational goals, identifying expenses, and budgeting.
B)   establishing organizational goals, budgeting for financial needs, and identifying sources of financing.
C)   developing a plan of action, monitoring the plan, and evaluating.
D)   identifying sources of financing, budgeting, and evaluating.
E)   None of these answers are correct.F) C) and E)
G) A) and E)

Question 3

____ is (are)  short-term promissory notes with no collateral that are issued by large corporations.

Accepted Answer

A)   Serial bonds
B)   Sinking funds
C)   Convertible bonds
D)   Credit agreements
E)   Commercial paperF) B) and C)
G) A) and E)

Question 4

It is not unusual for companies to issue ____ type(s)  of common stock and ____ type(s)  of preferred stock.

Accepted Answer

A)   one; one
B)   two; one
C)   one; many
D)   many; one
E)   zero; severalF) C) and D)
G) None of the above

Question 5

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

Accepted Answer

A)   a bank loan.
B)   trade credit.
C)   a promissory note.
D)   equity financing.
E)   None of these answers is correct.F) D) and E)
G) All of the above

Question 6

The highest cost of short-term finance generally is

Accepted Answer

A)   trade credit.
B)   unsecured bank loans.
C)   commercial paper.
D)   factoring.
E)   promissory notes.F) D) and E)
G) A) and B)

Question 7

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

Accepted Answer

A)   capital budget.
B)   cash budget.
C)   revenue forecast.
D)   zero budget.
E)   equity budget.F) A) and D)
G) C) and E)

Question 8

With regard to ongoing expenses, the most expensive type of long-term financing is the sale of common stock.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Equity capital generally provides the greatest part of a firm's financing.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A)   Mike's Pizza Place
B)   A local housing construction company
C)   General Electric
D)   A medium-sized advertising agency
E)   United WayF) A) and E)
G) C) and D)

Question 12

The legal document detailing all the conditions relating to a bond issue is called a bond indenture.

Accepted Answer

A) True 
 B)False

Question 13

Commercial paper usually is issued

Accepted Answer

A)   for 3 to 7 years.
B)   for short-term financing by large corporations.
C)   for short-term financing by small businesses.
D)   by large corporations unable to get credit elsewhere.
E)   by savings and loan associations.F) A) and D)
G) A) and C)

Question 14

Financial managers should

Accepted Answer

A)   ignore minor budgeting problems and concentrate on major problems when budgeting.
B)   establish a means of monitoring financial performance on an interim basis.
C)   prepare budgets and hope for the best.
D)   hire a person to go over interim budgets.
E)   fire or demote individual managers when budgeting goals are not achieved.F) All of the above
G) B) and D)

Question 15

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

Accepted Answer

A)   debt equity.
B)   sale of assets.
C)   government grants.
D)   sales revenue.
E)   equity capital.F) B) and E)
G) D) and E)

Question 16

Zero-base budgeting is a budgeting approach in which every expense must be justified in every budget.

Accepted Answer

A) True 
 B)False

Question 17

A factor is a financial firm that specializes in buying other firms' accounts receivables.

Accepted Answer

A) True 
 B)False

Question 18

Private placements are used to sell stock to individual investors.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)   cash and accounts receivable.
B)   accounts payable and notes payable.
C)   inventory and equipment.
D)   marketable securities and owners' equity.
E)   accounts receivable and inventory.F) A) and B)
G) A) and D)

Question 20

Most firms like lines of credit because the compensating balance requirement frees up their capital to pay short-term debts.

Accepted Answer

A) True 
 B)False

Exam 19: Mastering Financial Management

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

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

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The steps in effective financial planning are

Correct AnswerverifiedShow Answer

Financial managers should

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

With regard to ongoing expenses, the most expensive type of long-term financing is the sale of common stock.

Correct AnswerverifiedShow Answer

Equity capital generally provides the greatest part of a firm's financing.

Correct AnswerverifiedShow Answer

____ is (are) short-term promissory notes with no collateral that are issued by large corporations.

Correct AnswerverifiedShow Answer

Zero-base budgeting is a budgeting approach in which every expense must be justified in every budget.

Correct AnswerverifiedShow Answer

Private placements are used to sell stock to individual investors.

Correct AnswerverifiedShow Answer

Commercial paper usually is issued

Correct AnswerverifiedShow Answer

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

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

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It is not unusual for companies to issue ____ type(s) of common stock and ____ type(s) of preferred stock.

Correct AnswerverifiedShow Answer

Most firms like lines of credit because the compensating balance requirement frees up their capital to pay short-term debts.

Correct AnswerverifiedShow Answer

The highest cost of short-term finance generally is

Correct AnswerverifiedShow Answer

Assume you are a small retailer selling women's fashions. What actions can you take to build a credit relationship with a manufacturer or wholesaler to ensure that you can use trade credit to purchase needed inventory for your store?

Correct AnswerAnswered by ExamLex AIAs a small retailer selling women's fash...View AnswerShow Answer

A factor is a financial firm that specializes in buying other firms' accounts receivables.

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The legal document detailing all the conditions relating to a bond issue is called a bond indenture.

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It is not unusual for companies to issue type(s) of common stock and type(s) of preferred stock.

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Correct Answer
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Correct Answer
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As a small retailer selling women's fash...
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