Exam 18: Financial Management

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

The chief financial officer (CFO) is responsible for accounting and financial functions.

The concept time value of money indicates

Financial managers are responsible for controlling cash flows.

Inventory financing represents the selling of accounts receivables as collateral for a loan.

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

Corporations must comply with the Securities and Exchange Commission (SEC) requirements in order to sell their stock publicly.

Which of the following situations represents a successful use of financial leverage?

Long-term loans are often more expensive than short-term loans.

Equity financing must be repaid.

Venture capital is money that is invested in new or emerging companies that are perceived as having great profit potential.

One of the most common ways for a firm to fail financially is poor control over cash flow.

One of the challenges of effective financial management is

A(n) ________ is responsible for verifying that the accounting procedures within a firm are consistent with established accounting principles.

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.

The CFO of a satellite radio company was trying to work his magic today as he solicited another telecommunications/entertainment company to invest in his company in order to prevent bankruptcy. Having refinanced the company less than a year ago, the satellite radio finance manager had a $75 million note coming due today. The current financing arrangement represents

One of the primary factors that influences the interest rate a firm pays on long-term loans is the

The overall objective of financial planning is to optimize the firm's profitability and make the best use of its money.

A firm's short-term financial forecast provides a projected sales estimate.

Since commercial finance companies offer loans to higher-risk customers than commercial banks, the interest rates they charge are usually ________ than rates charged by banks.