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Chapter 18

Chapter 18. Financial Management CPS questions. 1. Which of the following function in business is responsible for acquiring funds for the firm and managing funds within the firm?. Accounting Managerial accounting Finance Financial accounting.

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Chapter 18

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  1. Chapter 18 Financial Management CPS questions

  2. 1. Which of the following function in business is responsible for acquiring funds for the firm and managing funds within the firm? • Accounting • Managerial accounting • Finance • Financial accounting

  3. 2. _______ is the most accurate statement about taxes. • Taxes represent an inflow of cash to the firm • Profitable businesses usually pay taxes • Tax management falls within the responsibility of marketing managers • Taxes cannot be managed because of fluctuations in political policy

  4. 3. Marty is the manager of Golden Candies. He is concerned that his cash expenditures have been exceeding his cash receipts for the last six months. What is Golden Candies is suffering from? • An accounting problem • An undercapitalization problem • A cash flow problem • An exchange rate problem

  5. 4. Judy intends to major in finance and find employment in corporate financial management. As a finance major, Judy will discover which of her courses to be similar to her finance classes? • Marketing • Psychology • Sociology • Accounting

  6. 5. Which is the first step in the financial planning process? • Forecasting financial needs • Preparing financial statements • Developing budgets • Establishing financial control

  7. 6. The managers of Cali Formations regularly compare their actual profits with the firm's projected profits. When deviations occur, the managers use the feedback to take corrective action when necessary. What are the managers of Cali Formations exercising? • Financial derivatives • Financial control • Financial planning • Financial budgeting

  8. 7. Atreyu knows of no better way of establishing revenue expectations and allocating resources in order to achieve the goals of her firm. Atreyu realizes the importance of developing which of the following for her interior design business? • Market prediction • Financial forecast • Budget • Cash flow analysis

  9. 8. As a finance manager at Honey Hotel’s, Veronica worries about the firm's borrowing and debt repayment requirements for the next year. She knows the benefit of estimating Honey’s cash disbursements and short-term investment expectations. Facing these concerns, which of these would provide Charlie with valuable information? • Operating budget • Cash budget • Capital budget • Line item budget

  10. 9. What is one of the challenges of effective financial management? • To have sufficient cash on hand without compromising the firm's investment potential. • Ensuring the satisfaction of each of the stakeholder groups. • Working within the strict regulations of the Financial Accounting Standards Board (FASB). • Providing the financial data in a timely manner for management consultants to improve decision making.

  11. 10. Firms use operating funds to finance • distributing depreciation payments. • obtaining inventory valuations. • managing accounts receivable. • selling corporate stock.

  12. 11. __________ would normally involve long-term financing. • Worker's salaries • Unanticipated emergencies • Purchase of modern equipment • Expanding current inventory

  13. 12. Charging interest on past due customer accounts reflects which of the following? • Credit sales cost more to manage than they are worth. • Credit customers receive preferential treatment. • Money has a time value. • Government regulations protect customers who are late in making payments.

  14. 13. __________ represents a source of short-term funding. • Retained earnings • Commercial paper • Common stock • Corporate bonds

  15. 14. Which of the following offers short-term secured loans to high-risk borrowers? • Commercial finance companies • Reserve banks • Credit brokers • Investment bankers

  16. 15. To secure financing for a planned expansion, Ohio Electronics borrowed $400,000 from Prince Finance. Which loan agreement requires that Ohio Electronics provide the title to their factory as collateral? • Recapitalization • Secured • Pledged • Minority

  17. 16. Tree Hugger Recycling uses its stock of unsold aluminum products as collateral for a short term loan. What does this arrangement represent? • A secured loan • A revolving credit agreement • Factoring • An unsecured loan

  18. 17. Businesses acquire long-term financing from which two major sources? • Debt financing and government funds • Equity financing and trade credit • Retained earnings and commercial paper • Debt financing and equity financing

  19. 18. _________ is a common source of long-term financing for a corporation. • A revolving credit agreement • Commercial paper • A bond issue • Trade credit

  20. 19. As Woody considers approaching a venture capital firm to provide funding for his new software firm, what should he realize that a venture capital firm will do? • Offer no more than 20 percent of the funding he needs. • Charge a higher interest rate than a commercial bank. • Expect the company to provide a steady dividend income. • Probably want an ownership interest in the business.

  21. 20. By purchasing stock in Entertainment Today, Vern has become a(n) _____ the company. • creditor of • owner of • general partner of • venture capitalist in

  22. Answer: C LG: 1 Page: 484 • Answer: B LG: 1 Page: 486 – 487 • Answer: C LG: 1 Page: 485 – 486 • Answer: D LG: 1 Page: 484 • Answer: A LG: 2 Page: 487 • Answer: B LG: 2 Page: 489 • Answer: C LG: 2 Page: 488 • Answer: B LG: 2 Page: 488 – 489 • Answer: A LG: 3 Page: 492 • Answer: C LG: 3 Page: 491 – 492 • Answer: C LG: 3 Page: 494; figure 18.4 • Answer: C LG: 3 Page: 492 • Answer: B LG: 4 Page: 498 • Answer: A LG: 4 Page: 497 • Answer: B LG: 4 Page: 496 • Answer: A LG: 4 Page: 496 • Answer: D LG: 5 Page: 500 • Answer: C LG: 5 Page: 501 • Answer: D LG: 5 Page: 504 • Answer: B LG: 5 Page: 503

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