Exam 19: Recognizing the Basics of Financial Management

Which of the following is one of the advantages of debt financing versus equity financing?

Before seeking financing, Mattel Toy Company needs to be sure that obtaining a long-term loan to expand production facilities will allow it to increase production, sales, and gain market share from Hasbro. Which key consideration for choosing a form of financing does this example illustrate?

Sandra has a dog boarding and grooming business. She purchases grooming supplies and dog food from a supplier and takes delivery; however, she has 30 days within which to pay the supplier's invoice. This is an example of which of the following?

MCB Company experienced a significant increase in sales as a result of its new promotional campaign. Yesterday, however, it realized that because most of those sales were on credit, it did not have enough money in the bank to pay this month's bills. MCB can take care of this situation temporarily by doing which of the following?

Gavin instructs his stockbroker to purchase 200 shares of Apple for investment in his individual retirement account. In which of the following markets will the stockbroker buy these shares?

Which of the following involves raising funds by selling ownership in the company?

Royal Caribbean Cruises would like to add an additional ship to its fleet. A new ship will cost $1.4 billion to build. Royal Caribbean plans to use cash and a long-term loan to finance the production of the new ship. However, the current interest rate on a $900 million loan is 5%, which Royal Caribbean feels is high. Which key consideration for choosing a form of financing does this example illustrate?

Banks and other financial institutions offer short-term loans not secured by collateral at interest rates that vary based on which of the following?

What is the most common form of short-term financing?

At the beginning of the fiscal year, ABC Inc. creates a budget that details material, labour, and other costs as well as projected revenue. This information appears on which type of budget?

Which of the following is a major source of short-term financing that is interest free, usually requires no collateral, and is involved in some form in 70-90% of all transactions between businesses?

Which of the following involves the use of borrowed funds that will be used for more than one year?

Which of the following is a corporation's written pledge to repay borrowed funds with interest to investors?

Eric's responsibility at his company is overseeing all the activities concerned with obtaining money and using it effectively. What is Eric's role?

As Whole Foods considers equity financing, it thinks about the influence that it may have on company operations. Which of the following is an advantage of equity financing in relation to this key consideration?

Last year, Boeing secured long-term financing in order to expand its facilities. To identify the timing of its cash flow, Boeing will include the loan payments on which of its budgets?

Which of the following is a tool that managers use to estimate major expenditures for assets, expansion of facilities, and mergers and acquisitions?

Hiromi has invented a nanogel that can heal burns more quickly than conventional wound dressings. She is seeking an investor to further develop and market her product. She offers an interested investor a 30% share of her company in return for a $600,000 investment. How much does Hiromi feel her company is worth?

Which ratio is based on the principle that a high-risk investment should generate higher financial returns for a business and more conservative decisions often generate lesser returns?

How many times can a corporation's shares be sold in the primary market?