Exam 17: Financial Management

Altitel Inc. has difficulties with managing operating costs of their company due to shortage of short-term finance. The company needs liquid assets and some capital to improve its performance in the market. Damon, an established businessman, raises money from wealthy individuals and invests it in the company. He also gives the company critical advice about managing their processes effectively. In exchange, Damon owns a small part of the company. In the context of the sources of financing, Damon is a _____.

_____ would be the LEAST likely to obtain a private placement.

ZeChems, a chemical manufacturer, has approximately $0.68 in assets for every dollar in sales. According to asset intensity, for every $100 increase in sales, the firm would need about $100 of additional assets.

Interest rates on short-term funds move up and down frequently.

Leverage _____ the return to shareholders and _____ the risk of their investment.

When a firm receives goods or services from a supplier and agrees to pay for them at a later date, this arrangement is called _____.

Most private placements are _____.

Public sales can vary substantially from year to year depending on the conditions in the financial markets.

Ben has three subordinates that report to him. They include the treasurer, the controller, and the vice president for financial management. In the context of the role of a financial manager, Ben is the _____ of his organization.

When a company borrows money in addition to shares, it creates leverage.

MATCHING Complete the following using the terms listed. -Stocks or bonds that are sold exclusively to a small group of large investors are known as _____.

Managing assets for an international company creates several new challenges for a financial manager.

All short-term bank loans are secured, meaning that the borrower pledges specific assets as collateral.

The treasurer is the chief financial officer of most firms.

MATCHING Complete the following using the terms listed. -_____ is extended by suppliers when a firm receives goods or services, agreeing to pay them at a later date.

Which of the following assets would a firm most likely finance using long-term sources?

Explain the difference between an expansion decision and a replacement decision.

Trade credit is a major source of short-term financing.

Explain why companies frequently choose to use debt.

Risk is defined as the uncertainty of a profit or a loss.