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

Timoth Steels, a steel manufacturing company, wants to install a new factory in Temenia. The company decides to use funds from its own account and refrain from borrowing money from banks. Which of the following sources of long-term funds is being used by Timoth Steels in the given scenario?

Benny-Duke Inc. reported a net income of $7 million but paid no dividends to its shareholders. The shareholders should sue the company for failure to provide a return on their equity investment.

Garry, a financial manager at AtoZ technologies, wants to know when his firm will need to arrange for short-term financing and when the firm is likely to have surplus cash available to pay off loans or to invest in short-term liquid assets. These concerns suggest that Garry would want to develop a _____.

Merith Qin, a textile company, relies on self-funding in order to sustain the promotion of its new product in the market. The company sold its newly issued stock and was able to amass a sizable amount of money to invest. Which of the following sources of long-term funds is being used by Merith Qin in the given scenario?

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

Jessie, the regional manager of a large electronics firm, is trying to determine whether a new warehouse for her firm would be 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?

Hevron Hrist, a multinational company, finances itself each year by procuring 25 percent of its yearly budget through loans from banks. The remaining budget is covered by the company itself. The given scenario suggests that the firm most likely relies on measuring _____ to decide its capital structure.

Miranti Nex, an automobile company, plans to invest in developing a hybrid car. It refrains from using loans from other firms and instead uses its own monetary resources to fund the project. Which of the following sources of long-term funds is being used by Miranti Nex in the given scenario?

Duk Yu, a beverage company, buys its raw materials from Nessange, a fruits and vegetables exporting company, without making any payment at the time of purchase. Instead, Nessange allows Duk Yu to pay the total purchase amount within a period of six months. Which of the following short-term financing options is being used by Duk Yu in the given scenario?

When customers of Trankent Corp., an equipment manufacturing unit, buy equipment on credit and then delay making payments, they receive a bill from a collection agency. Which of the following sources for short-term financing is being used by Trankent Corp. in this scenario?

_____ are ratios that measure the rate of return a firm is earning on various measures of investment.

A factor is a restriction lenders impose on borrowers as a condition of providing long-term debt financing.

Which of the following statements best describes a highly leveraged firm?

Which of the following statements is true of financial leverage?

A budgeted income statement is a detailed forecast of future cash flows that helps financial managers identify when their firm is likely to experience temporary shortages or surpluses of cash.

Which of the following statements is true of angel investors?

A project with a negative net present value should be:

When conflicts arise between the long-term interests of owners and those of other stakeholders, financial managers generally adopt the policies they believe are most consistent with the interests of ownership.

Tusken Thaw, a shipping industry, plans to expand its customer base to other countries. To facilitate this process, Tusken Thaw seeks financial assistance from Jermino Bank. The bank agrees to lend a specified amount of money; however, it mandates Tusken Thaw to return the amount with interest in a regular schedule of fixed payments. Which of the following sources of long-term funds is being used by Tusken Thaw in the given scenario?

A high inventory turnover ratio is good because it indicates that: