Exam 9: Finance: Acquiring Using Funds to Maximize Value

Trade credit is a credit granted by sellers by providing firms with materials, parts, or finished goods without requiring payment until some period after delivery.

_____ is a short­term unsecured, promissory notes issued by financial institutions and other major corporations.

Sally McGregor sells lawn and garden products in bulk to various companies. She extends credit to her customers for 60 days, but often has to wait for months before she receives full payment. She cannot extend her credit limit any more because her business is still in the growing stage and she cannot afford it. Sally is willing to forego a small amount of the money, as long as she gets the rest of the amount immediately. Which of the following steps should she take to resolve her collection problems?

Funds for start­up firms are generally more limited than those available to mature firms. Which of the following is generally NOT included in the list of main source of funds for start­up firms?

_____ are companies that provide short­term financing to firms by purchasing their accounts receivables at a discount.

An advantage of offering more lenient credit terms is that it helps a firm _____.

Capital _____ is the process a firm uses to evaluate long­term investment proposals.

Pro forma financial statements provide a framework for analyzing the impact of the firm's plans on the financing needs of the company.

When financial managers compare cash flows that occur at different times, they should take the time value of money into account.

The two primary sources of equity financing are:

Explain the similarities and differences between lines of credit and revolving credit agreements.

Which of the following is not a cash equivalent?

Projects with a potential for high returns generally have a low degree of uncertainty and risk.

The value in a firm's cash account is always the same as the amount listed as the firm's retained earnings.

A negative net present value indicates that the cost of the project is less than the present value of the expected future cash flows from the project.

The budgeted balance sheet helps financial managers determine the amount of additional financing the firm must arrange to acquire assets that it will need to implement its future plans.

Return on equity and earnings per share are both classified as _____ ratios.

As a financial manager, Lisa wants to know when her firm will need to arrange for short­term financing and when the firm is likely to have surplus cash available to pay off loans or to invest in short­term liquid assets. These concerns suggest that Lisa would want to develop a:

Tulips Inc. saw an increase in profits last year following which the management decided to reinvest earnings. These retained earnings will be used to:

The assumed rate of interest that will influence the present value of a cash flow to be received in the future is referred to as the discount rate.