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Exam 16: Mastering Financial Management

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Question 31

Multiple Choice

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A statement that projects income and/or expenditures over a specified future period is called a

A) financial plan.
B) cash flow plan.
C) resources plan.
D) resource allocation statement.
E) budget.

F) D) and E)
G) B) and C)

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Question 32

Multiple Choice

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Inventory requires considerable investment for most manufacturers,wholesalers,and retailers.This problem is complicated by the fact that most goods are manufactured four to nine months before they are actually sold to consumers.Manufacturers that engage in this type of speculative production often need short-term financing to do all of the following except

A) buy materials.
B) pay wages.
C) pay rent.
D) buy equipment.
E) buy supplies.

F) None of the above
G) A) and D)

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Question 33

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The denominations for corporate bonds range from $1,000 to $50,000.

Fred,the president of Fred,Inc.,has executed a ____.The terms of the Fred,Inc.promissory note require the corporation to repay the loan in monthly installments.

When bonds issued at the same time mature on different dates,they are referred to as ____ bonds.

The Electronic Funds Transfer Act protects the customer in case a bank makes an error or the customer's credit or debit card is stolen.

Sara Lee Corporation is a large conglomerate of businesses participating in a variety of industries.A few years ago,Sara Lee was considering the purchase of Bryan Foods.If Bryan Foods represented a tremendous opportunity to make the company more successful,Sara Lee may,as a last resort,have considered

Short-term financing is used to start a new business.

What is cash flow? Why is cash flow important to a business?

A term-loan agreement is a promissory note that requires a borrower to repay a loan in monthly,quarterly,semiannual,or annual installments.

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

Interest on corporate bonds is paid quarterly.

When Silver 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 Silver Fitness receives from this arrangement?

The maturity date is the date on which the corporation is to repay the money borrowed from bondholders.

What is the typical denomination for most corporate bonds?

It is not necessary to give most lenders a current business plan or audited financial statements when requesting a long-term business loan.

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.

In order to repay some corporate bonds,a firm may be required to deposit a specified sum of money each year until the bond's maturity in a sinking fund.

Erick's Transition Erick 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.Erick now believes he has strengthened his competitive advantage in his quest for the job. -Refer to Erick's Transition.When Erick 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?

The terms 2/10,net 30 are used with most promissory notes.