Exam 8: Finance: Acquiring and Using Funds to Maximize Value

The finance managers collected the following information for their firm: Total Assets = $60 000; Current Assets = $10 000; Long-term Liabilities = $100 000; Current Liabilities = $8000.What is the current ratio?

What is the term for companies that provide short-term financing to firms by purchasing accounts receivable at a discount?

What is the term for the conditions lenders place on firms that seek long-term financing?

The debt-to-asset ratio measures the extent to which a firm relies on debt financing by dividing total debt by total assets.

Which ratio measures the ability to pay short-term liabilities as they come due?

A firm that extends credit for only 30 days is likely to receive its payments faster than a firm that allows customers 60 or 90 days,but such a policy is likely to cause a loss of sales.

Define accounts receivable.What are the advantages and disadvantages of having a large accounts receivable? Describe how corporations manage their accounts receivable accounts.

Most common financial ratios are based on information taken from a firm's balance sheet and income statement.

The closer the debt-to-asset ratio is to one,the greater the firm's reliance on debt.

What is net working capital? Describe the key components of net working capital.

The current ratio is calculated by dividing the firm's past expenses by current assets.

Capital budgeting is the procedure a firm uses to plan its cash flow strategy for the next year.

The debt-to-equity and debt-to-assets ratios are both classified as what type of ratios?

The key numbers that financial managers use to calculate ratios usually come from which of the following financial statements of a firm?

Which of the following determines the types of assets needed to achieve the goals of the organization and determines the best way to obtain the funds needed to acquire those assets?

Money market mutual funds are a way for small investors to get into the market for securities that would otherwise be too expensive for them to afford.

The time value of money is based on the idea that inflation erodes the purchasing power of the dollar.

Which of the following are short-term,very safe,and highly liquid assets firms include in the cash holdings they report on their balance sheet?

Spontaneous financing arises as a natural result of a firm's business operations without the need for special arrangements.

As a financial manager,Leonard 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 Leonard would want to develop which of the following?