Typically, only highly regarded customers with financial stability receive __________. |
C. unsecured loans |
A firm negotiates a(n) _________ with its bank. This arrangement gives the firm access to a specified amount of unsecured short-term funds, provided the bank has the funds available. |
D. line of credit |
By selling shares of ownership in their company, California Scientific acquires the funds needed to finance their research and development projects. California Scientific provides for their long-term funding needs through ________ financing. |
B. equity |
An effective budget requires: |
B. accurate forecasts. |
Delaware Aluminum uses its stock of unsold aluminum products as collateral for a short-term loan. This arrangement represents: |
A. a secured loan. |
By borrowing $10 million from First Dayton Bank, Hi-Lo Industries is utilizing ________. |
B. debt financing. |
The rationale behind offering customers credit is: |
A. Permitting customers to pay with credit cards or on credit makes it easier for them to buy, and it also attracts new customers. |
If a company secures a three year bank loan, it is considered _________. |
D. long-term financing |
Which of the following represents a source of short-term funding? |
B. Commercial paper |
Which of these statements about corporate bonds is correct? |
C. Interest paid to bondholders represents a tax-deductible business expense. |
The overall objective of financial planning is to: |
C. optimize the firm's profitability. |
Which of the following companies is undercapitalized? |
B. A new company struggling because it has insufficient start-up funds |
A _________ forecast predicts the revenues, costs, and expenses a firm will incur for a period longer than one year. |
D. long-term |
Undercapitalization refers to the problem of: |
A. insufficient start-up funds. |
___________ refers to the process that identifies variances by comparing actual revenues and expenses to projected revenues and expenses. |
D. Financial control |
No matter the size of the business, finance is a critical activity for: |
B. profit-seeking and nonprofit organizations. |
Which of the following commonly results in the financial failure of a firm? |
B. Undercapitalization |
The rate of return a company must earn to meet the demands of its lenders and expectations of its equity holders is called: |
C. cost of capital. |
A(n) __________ is responsible for verifying that the accounting procedures within a firm are consistent with established accounting principles. |
D. internal auditor |
Virginia Supply offers their customers trade credit with terms 2/15 net 30. This implies that: |
D. the annual financing cost of failing to pay within 15 days is about 48%. |
Money has a time value because: |
B. money earns interest over time. |
In order to assist in revenue realization, a(n) ________ allocates resources throughout the firm. |
C. budget |
A _________ represents a long-term debt obligation issued by a corporation or a government. |
D. bond |
The interest paid on ________ represents a tax-deductible business expense. |
A. bonds |
The effective management of accounts receivable requires financial managers to: |
A. review the credit history of new customers. |
Which of the following shows a firm's spending plans on fixed assets such as large equipment? |
A. Capital budget |
Carolina Financial Services is considering the purchase and installation of an expensive computer network. This is the type of expenditure that would be included in a(n): |
A. capital budget. |
__________ provide financing to new or emerging companies with high profit potential. In return, these organizations expect a share of ownership in the company. |
B. Venture capital firms |
Which business function involves credit management/collecting funds from customers? |
D. Finance |
Which of the following statements about taxes is accurate? |
B. Profitable businesses usually pay taxes. |