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Exam 16: Mastering Financial Management

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Question 51

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Money obtained through various types of loans is called

A) cash flow.
B) factor proceeds.
C) dividends.
D) equity capital.
E) debt capital.

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

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Question 52

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In what situations would you seek short-term financing? In what situations would you seek long-term financing?

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Short-term financing, money that will be...

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Question 53

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Which of the following is not an advantage that promissory notes have over trade credit from the perspective of the seller?

Compare the traditional approach to budgeting with the zero-base budgeting approach.

Which of the following might be considered the most drastic step in securing funding, often a last resort for a corporation?

A firm with questionable credit should expect to pay the prime interest rate minus 2 percent.

Todd develops a plan for obtaining and using the money necessary for his company to implement its goals. This is called a(n)

To raise money, Fawcett Productions sold its accounts receivable to a ____. In doing so, Fawcett received cash and shifted to the other company both the task of collecting and the risk of nonpayment.

Some equity capital generally is used to start a

State the purpose of a promissory note. Describe why a supplier would use a promissory note for short-term financing instead of trade credit.

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

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

Most mature corporations distribute ____ of their after-tax profits as dividends to stockholders.

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?

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 financ -Refer to Morgan's Transition. Having taken the classes, Morgan should describe cash flow as which of the following?

MCB Company experienced a significant increase in sales as a result of its new promotional campaign. Yesterday, however, it realized that because most of those sales were on credit, it did not have enough money in the bank to pay this month's bills. MCB can take care of this situation temporarily by

____ is (are) the earnings of a corporation that are distributed to the stockholders.

Explain the primary differences between the primary market and the secondary market. Is an IPO most related to the primary market or the secondary market? Explain.

Kirsten purchased a new dining room table and china cabinet from Discount Furniture, which offered a one-year special with no interest or financing charges. When Kirsten makes her purchase, Discount Furniture checks her credit and seeks approval for her. Upon approval, Kirsten receives information informing her that she will make payments to Regional Finance Company. This arrangement is an example of

The least expensive form of short-term financing is