Exam 18: Financial Management

If a company secures a one-year bank loan this is considered

Businesses acquire long-term financing from two major sources,

A firm's most recent financial statements often serve as the basis for predicting future sales, costs, and expenses.

Financial managers are responsible for budgeting, auditing, and advising top management on financial matters.

A ________ forecast predicts the revenues, costs, and expenses a firm will incur for a period of one year or less.

When using equity financing, firms incur a legal obligation to repay the amount of money invested.

Unlike bonds, stocks offer the advantage of tax-deductible interest payments.

Most companies have the ready cash available to make large purchases.

If a firm sells shares of stock, it is financing with

Undercapitalization refers to the problem of

The first time a company offers to sell its stock to the general public is called an initial private label (IPL).

As mentioned in the Spotlight on Small Business box, Kobe Bryant is pivoting into being a venture capitalist.

Theme Park Thrillers has plans to build a new $175 million theme park and intends to finance this project through the sale of additional shares of ownership in their firm. Selling new shares of stock represents ________ financing.

Melanie, a financial manager, holds responsibilities that include the interpretation of financial statements provided by the firm's accountants and the preparation of recommendations to top management.

Although best used as a last resort, many small businesses find it convenient to use ________ as a short-term source of financing. Although this form of short-term debt comes with high interest rates, it provides a quick line of credit for many firms, including start-up companies who may not be able to secure bank loans.

Portable Pet Care plans to purchase a second mobile veterinary clinic next year that will cost an estimated $95,000. The finance manager will include this projected purchase in the company's capital budget.

Snowy Mountain Ski Lodge owners know that the lifts on the north slope will need replacing in the next two years. Three months prior to replacement, they will include the expenditure in their cash budget.

Trade credit represents one of the most expensive forms of short-term financing.

When using ________ financing, the company incurs a legal obligation to repay the amount borrowed.

Budgets are prepared after the financial forecasts are developed.