Exam 17: Financial Management Appendix C Managing Risk

Rebecca intends to major in business in college.She has never had much interest in subjects with numbers and so she'd like to avoid taking any finance courses if possible.Rebecca should:

As a financial manager for a very profitable manufacturer of specialty steel,Kurt has been asked to investigate sources of long-term funds to finance the construction of a new facility.Kurt would prefer a funding source that does not require interest payments or involve major underwriting fees.One source that Kurt will find attractive is retained earnings.

A just-in-time inventory system allows a firm to:

No matter the size,finance is a critical activity for:

Commercial paper consists of unsecured short-term debt.

Credit cards are a good choice as a source of short-term financing needed for the next year.

offers financially stable corporations a technique to raise short-term funds by issuing unsecured promissory notes to the general public.

Rather than requiring cash payment for all sales,some firms offer credit to:

The effective management of accounts receivables requires financial managers to:

A bond is like a company-issued IOU with a promise to repay the amount borrowed on certain date.

When using ______financing,the company incurs a legal obligation to repay the amount borrowed.

Equity financing represents money acquired from the operations of the firm or through the sale of ownership in the company.

Businesses acquire long-term financing from two major sources:

After earning $30 million in net income,Rolatrim Industries distributed $5 million in dividends to their stockholders.The board of directors of the firm decided to invest the remaining $25 million back into the business.This $25 million reinvestment of profits represents:

A line of credit represents a guarantee from a bank to lend a firm a given amount of money.

The concept of the time value of money is based on the interest earning power of money.

An operating budget analyzes the firm's spending plans for long-lasting assets that require large sums of money.

Jackson Plumbing,a medium sized company,wants to guarantee that it can obtain short-term funds to meet unexpected future cash needs.Which of the following strategies would best meet the financing needs of Jackson Plumbing? Financial managers at Jackson Plumbing should:

Financial control is a process where firms compare actual revenues and costs with budgeted revenues and costs.

Long-term financing would normally be used to purchase: