Exam 18: Financial Management

A company keeps $150,000 cash reserve to meet day-to-day expenses.The cash reserve is centralized and various branches can access money from the reserve to meet every-day expenses.This cash reserve is part of the company's ________ account.

With most bond issues,a corporation retains the right to pay off the bonds before maturity.Such bonds are called ________.

________ is an arrangement in which a financial institution makes money available for use at any time after the loan has been approved.

________ is the average rate of interest a firm pays on its combination of debt and equity.

________ is an SEC-required document that discloses required information about the company,its finances,and its plans for using the money it hopes to raise.

An operational budget outlines expenditures for real estate,new facilities,and major equipment.

Explain the importance of considering interest fluctuations in financial planning.

Boston Ceramics is a manufacturer of semiconductors.The company produces such parts as ceramic machine components.The company wants to raise $15 million to launch operations in a new country.The company decides to fund the launch entirely by using debt financing.Which of the following observations,if true,would most strengthen this financing decision?

Short-term financing is used to cover ________ of a business.

Roder Industries is a multinational production firm.Invo Bank is the firm's major financier in the United States.The bank offers short-term loans to Roder at a very low rate and the bank considers Roder to be its best customer.The interest rate the Invo bank charges on these short-term loans are called ________ interest rate.

Prime interest rate is the ________.

Which of the following is the best example of an external source for obtaining funds for business?

Equity financing refers to arranging funding by selling ownership shares in the company.

The term compensating balance refers to the portion of an unsecured loan that ________.

A ________ is a planning and control tool that reflects expected revenues,operating expenses,and cash receipts and outlays.

Long-term loans on real estate are called mortgages.

Dulbor is a manufacturer of automobile tires.The company requires such raw materials as natural rubber,activators,and other chemicals.Total fund available to the company in the current financial year is $500,000.Construct a financial plan for Dulbor.Make the necessary assumptions.

________ refers to short-term promissory notes,or contractual agreements,to repay a borrowed amount by a specified time with a specified interest rate.

Equity financing refers to arranging funding by ________.

Commercial paper is an arrangement in which a financial institution makes money available for use at any time after the loan has been approved.