Exam 17: Financial Management Appendix C Managing Risk

represent the most favoured source of meeting long-term financing needs because there are no interest payments,dividends,or underwriting fees required when using this source.

A well-known finance designation is the CFA designation.

Charging interest on past due customer accounts reflects that:

The last step in the financial planning process is to establish financial controls.

A company's capital budget helps management plan for cash shortages or surpluses.

An unsecured corporate bond is known as a debenture bond.

Utilizing equity financing may result in new owners buying an interest in the firm.

A debenture is a special type of stock that pays a higher dividend than common stock.

Equity financing must be repaid.

Effective financial managers evaluate customers' ability to pay for merchandise purchased on credit.

Budgets are prepared after the financial forecasts are developed.

Long-term financing is used to buy long-lived assets,such as buildings and equipment.

A capital budget highlights the expected funds to be provided by owner investments.

Lancer Wholesale Company wants to improve cash flow provided by accounts receivable collections.Which of the following strategies would be most likely to help Lancer achieve this objective?

Bankers are often reluctant to make loans to small businesses.

The financial manager of Caroline Graphics negotiated a ______with her bank that allows Caroline to borrow up to $50,000 without collateral.This arrangement eliminates the need to renegotiate the terms of the loan and complete new paper work each time Caroline borrows money.The preapproved loan agreement is contingent upon the bank having the funds available.

A______ represents a long-term debt obligation issued by a corporation or government.

______represents funds acquired for major purchases that will be repaid over a year or longer.

One of the challenges of effective financial management is:

Successful businesses establish restrictive credit policies encouraging customers to pay cash.