Exam 18: Financial Management

What are two major forms of debt financing? Describe and differentiate between the two types.

Recently, Epic Electronics borrowed $600,000 from Dinero Finance to secure financing for a planned expansion. The ________ loan agreement requires that Epic Electronics provide the title to their factory as collateral.

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

A line of credit is a given amount of unsecured short-term funds a bank will lend to a business.

Funds obtained from venture capitalists are considered equity financing.

An example of a firm using leverage to its advantage is a firm that borrows funds at 9% and invests those funds to earn 14%.

What is equity financing? Identify and describe the major sources of equity financing.

A secured loan means the borrower has the security of knowing repayment is not due for several years.

Typically, only highly regarded customers with financial stability receive

A(n) ________ job includes forecasting, budgeting, cash flow analysis, cost control, taxes, and credit management.

The managers of Comfort Clothing regularly compare actual profits with the firm's projected profits. When deviations occur, the managers use the feedback to take corrective action when necessary. The management of Comfort Clothing is exercising financial

Most companies require long-term capital to purchase fixed assets such as plant and equipment, to develop new products and services, or to finance an expansion.

Diana is a financial manager for Eagle Eye Care, a chain of retail stores offering optical care and glasses. The majority of Diana's day likely involves efforts to locate and secure long-term financing to fund Eagle Eye Care's capital expenditures.

Which of the following companies is undercapitalized?

A share of stock represents a company-issued IOU including a promise to repay on a certain date.

Financial control is a process where firms compare actual revenues and costs with budgeted revenues and costs.

The rationale behind offering customers credit is

Financial managers examine the data prepared by accountants and make recommendations to top management regarding strategies for improving the financial performance of the company.

The budget that estimates a firm's projected cash inflows and outflows, as well as cash shortages or surpluses during a given time period, is called the ________ budget.

Pure Power issued $300 million of bonds to finance a major upgrade of its largest power plant in Georgia. The issuance of these bonds indicates that Pure Power utilizes equity capital to meet its long-term financing needs.