Exam 9: Finance: Acquiring and Using Funds to Maximize Value

As the recession of 2007-2008 loomed over both large and small businesses, many firms looked for ways to deleverage. The term "deleveraging" implies that the firms:

A project with a negative net present value should be:

A _____ is a guaranteed line of credit in which a bank makes a binding commitment to provide a business with funds up to a specified credit limit at any time during the term of the agreement.

The current ratio is calculated by dividing the firm's current liabilities by its total assets.

The two primary sources of equity financing are:

For financial managers to be socially responsible, it is necessary that they:

Jessie, the regional manager of a large electronics firm, is trying to determine whether a new warehouse is a good investment. After discussing with her firm's financial managers, she concludes that the project carries a negative NPV (Net Present Value). What should Jessie do and why?

Financial managers use _________ to assess the financial strengths and weaknesses of their firm.

The following questions must be answered when setting credit terms: How long should the firm extend credit? What type of cash discount should the firm offer to encourage early payments?

The budgeted income statement is a projected financial statement that forecasts the types and amounts of assets a firm will need to implement its future plans and how the firm will finance those assets.

The main disadvantage of financial leverage is that it:

When financial managers are concerned about their firm's ability to pay off debts that will come due in the next year, they are likely to focus on _________.

Kun works for PowTran Corp. Her primary responsibilities include managing the firm's working capital and analyzing long-term investment opportunities for PowTran. Kun is part of the firm's _____ management team.

Which of the following is a key difference between a line of credit and a revolving credit agreement?

Name and discuss two main goals of finance. Are these goals mutually exclusive? Explain your answer.

A marketable security is a cash equivalent unlike _____.

A disadvantage of debt financing is that creditors often impose covenants on the borrower.

The debt-to-asset ratio compares a firm's total liabilities to its total assets and is a way of measuring the degree of financial leverage.

Define the two primary sources of equity financing.

The _____ forecasts the types and amounts of assets a firm will need to implement its future plans as well as the amount of additional financing the firm must arrange in order to acquire those assets.