Question 1

Which of the following consists of the stocks of goods,materials,parts,and work-in-process that firms hold as part of doing business?

Accepted Answer

A) current assets 
B) fixed assets 
C) accounts receivables 
D) inventory 
A) current assets 
B) fixed assets 
C) accounts receivables 
D) inventory

Question 2

A drawback of commercial paper is that it takes a long time to mature,thus making it a risky asset to hold if the firm is likely to need cash in the near future.

Accepted Answer

A) True 
 B)False

Question 3

Companies with rapidly growing sales seldom experience cash flow problems.

Accepted Answer

A) True 
 B)False

Question 4

Commercial paper is a short-term unsecured promissory note issued by large corporations.

Accepted Answer

A) True 
 B)False

Question 5

When an invoice lists the terms as 3/15 net 45,the "net 45" means that the seller requires payment in full within 45 days.

Accepted Answer

A) True 
 B)False

Question 6

Kendra Wright was recently hired by High Adventure Inc.to be a financial manager.She is surprised to learn that the company currently operates "by the seat of its pants." As she seeks to develop a more rigorous financial plan,what will she have to do?

Accepted Answer

A) make heavy use of a technique known as value mapping 
B) work independently of others in the organization 
C) avoid too much reliance on pro forma statements 
D) seek input from the managers of the various functional units of the firm as well as the firm's accountants 
A) make heavy use of a technique known as value mapping 
B) work independently of others in the organization 
C) avoid too much reliance on pro forma statements 
D) seek input from the managers of the various functional units of the firm as well as the firm's accountants

Question 7

A low burn rate is an indication that the firm is losing cash at a faster rate than other firms in its industry.

Accepted Answer

A) True 
 B)False

Question 8

In which scenario can firms achieve their objective by developing a relationship with a firm that offers factoring services?

Accepted Answer

A) the firm has established a source of long-term financing that avoids fees and commissions 
B) the firm plans to issue large sums of commercial paper in the near future 
C) the firm has larger than necessary cash balances and wants to find a safe way to invest the excess cash 
D) the firm relies heavily on credit sales and wants to speed up the receipt of cash 
A) the firm has established a source of long-term financing that avoids fees and commissions 
B) the firm plans to issue large sums of commercial paper in the near future 
C) the firm has larger than necessary cash balances and wants to find a safe way to invest the excess cash 
D) the firm relies heavily on credit sales and wants to speed up the receipt of cash

Question 9

The time value of money is the principle that a dollar received today is worth less than a dollar received in the future.

Accepted Answer

A) True 
 B)False

Question 10

Net working capital is the difference between a firm's current assets and its fixed assets.

Accepted Answer

A) True 
 B)False

Question 11

Financing provided by a firm's owners is classified as what type of financing?

Accepted Answer

A) equity financing 
B) unrestricted financing 
C) primary financing 
D) debt financing 
A) equity financing 
B) unrestricted financing 
C) primary financing 
D) debt financing

Question 12

Pro forma statements are idealized financial statements that show the firm's average financial performance over the past 10 years.

Accepted Answer

A) True 
 B)False

Question 13

Today many financial managers accept the view that serving the needs of other stakeholders can be consistent with the goal of maximizing the value of the firm to its owners.

Accepted Answer

A) True 
 B)False

Question 14

Snow International,a ski company in Canada,has 500 shares of outstanding common stock and has not issued any preferred stock.Net income is $27 500.What would be the earnings per share calculation?

Accepted Answer

A) $27 500 - 500 = $27 000 
B) $27 500 ?6? 500 = $13 750 000 
C) 500/$27 500 = $.018 
D) $27 500/500 = $55 
A) $27 500 - 500 = $27 000 
B) $27 500 ?6? 500 = $13 750 000 
C) 500/$27 500 = $.018 
D) $27 500/500 = $55

Question 15

What role does a factor play in providing short-term financing to a firm? Why would firms that rely heavily on credit sales find factoring attractive?

Accepted Answer

A factor is a company that buys the acco

Question 16

Which term is used to describe the use of debt in a firm's capital structure?

Accepted Answer

A) debt loading 
B) discounting 
C) liquidity boosting 
D) financial leverage 
A) debt loading 
B) discounting 
C) liquidity boosting 
D) financial leverage

Question 17

Financial managers usually focus almost exclusively on meeting the financial needs of their firms in the short run,leaving long-run financial issues to top management.

Accepted Answer

A) True 
 B)False

Question 18

Investing in fixed assets would be classified as which type of budgeting?

Accepted Answer

A) operating budgeting 
B) capital budgeting 
C) master budgeting 
D) working capital budgeting 
A) operating budgeting 
B) capital budgeting 
C) master budgeting 
D) working capital budgeting

Question 19

George's Car Repair Shop buys parts from a local parts distributor.The distributor delivers the parts promptly under terms stated on the invoice that say: 3/15 net 30.George has always paid the bill in just 30 days and has never really worried about these invoice terms.Which of the following would you choose as your advice to George?

Accepted Answer

A) George should not react to these payment terms because they are a tactic used by many distributors to get customers to pay early, with little or no benefit to George. 
B) These terms mean that the payment is due in 30 days, but that as long as he is not more than 15 days late, he can avoid the 3% late penalty. Thus, George could actually delay payment until the 45th day without incurring a penalty. 
C) He is smart to wait until the 30th day before making payment because this gives him the use of cash for the maximum possible amount of time. 
D) If possible, it is smart to pay the bill within 15 days after receipt because then he will receive a 3% discount. If he does a lot of business with this firm, this will result in a sizeable savings for George by year's end. 
A) George should not react to these payment terms because they are a tactic used by many distributors to get customers to pay early, with little or no benefit to George. 
B) These terms mean that the payment is due in 30 days, but that as long as he is not more than 15 days late, he can avoid the 3% late penalty. Thus, George could actually delay payment until the 45th day without incurring a penalty. 
C) He is smart to wait until the 30th day before making payment because this gives him the use of cash for the maximum possible amount of time. 
D) If possible, it is smart to pay the bill within 15 days after receipt because then he will receive a 3% discount. If he does a lot of business with this firm, this will result in a sizeable savings for George by year's end.

Question 20

Which ratio measures the extent to which a firm relies on debt to meet its financing needs?

Accepted Answer

A) asset management ratio 
B) leverage ratio 
C) profitability ratio 
D) liquidity ratio 
A) asset management ratio 
B) leverage ratio 
C) profitability ratio 
D) liquidity ratio

Which of the following consists of the stocks of goods,materials,parts,and work-in-process that firms hold as part of doing business?

A drawback of commercial paper is that it takes a long time to mature,thus making it a risky asset to hold if the firm is likely to need cash in the near future.

Companies with rapidly growing sales seldom experience cash flow problems.

Commercial paper is a short-term unsecured promissory note issued by large corporations.

When an invoice lists the terms as 3/15 net 45,the "net 45" means that the seller requires payment in full within 45 days.

Kendra Wright was recently hired by High Adventure Inc.to be a financial manager.She is surprised to learn that the company currently operates "by the seat of its pants." As she seeks to develop a more rigorous financial plan,what will she have to do?

A low burn rate is an indication that the firm is losing cash at a faster rate than other firms in its industry.

In which scenario can firms achieve their objective by developing a relationship with a firm that offers factoring services?

The time value of money is the principle that a dollar received today is worth less than a dollar received in the future.

Net working capital is the difference between a firm's current assets and its fixed assets.

Financing provided by a firm's owners is classified as what type of financing?

Pro forma statements are idealized financial statements that show the firm's average financial performance over the past 10 years.

Today many financial managers accept the view that serving the needs of other stakeholders can be consistent with the goal of maximizing the value of the firm to its owners.

Snow International,a ski company in Canada,has 500 shares of outstanding common stock and has not issued any preferred stock.Net income is $27 500.What would be the earnings per share calculation?

What role does a factor play in providing short-term financing to a firm? Why would firms that rely heavily on credit sales find factoring attractive?

Which term is used to describe the use of debt in a firm's capital structure?

Financial managers usually focus almost exclusively on meeting the financial needs of their firms in the short run,leaving long-run financial issues to top management.

Investing in fixed assets would be classified as which type of budgeting?

Which ratio measures the extent to which a firm relies on debt to meet its financing needs?

Business Now: Change Is the Only Constant

Business Communication: Creating and Delivering Messages That Matter

Business Ethics and Social Responsibility: Doing Well by Doing Good

Economics: the Framework for Business

Business Formation: Choosing the Form That Fits

Small Business and Entrepreneurship: Economic Rocket Fuel

Accounting: Decision Making by the Numbers

Securities Markets : Trading Financial Resources

Marketing: Building Profitable Customer Connections

Part 1: Product and Promotion: Creating and Communicating Value

Part 2: Product and Promotion: Creating and Communicating Value

Distribution and Pricing: Right Product, right Person, right Place, right Price

Management, motivation, and Leadership: Bringing Business to Life

Human Resource Management: Building a Top-Quality Workforce

Managing Information and Technology: Finding New Ways to Learn and Link

Operations Management: Putting It All Together

The World Marketplace: Business Without Borders

Labour-Management Relations

Business Law

Personal Finance

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

Which of the following consists of the stocks of goods,materials,parts,and work-in-process that firms hold as part of doing business?

A drawback of commercial paper is that it takes a long time to mature,thus making it a risky asset to hold if the firm is likely to need cash in the near future.

Companies with rapidly growing sales seldom experience cash flow problems.

Commercial paper is a short-term unsecured promissory note issued by large corporations.

When an invoice lists the terms as 3/15 net 45,the "net 45" means that the seller requires payment in full within 45 days.

Kendra Wright was recently hired by High Adventure Inc.to be a financial manager.She is surprised to learn that the company currently operates "by the seat of its pants." As she seeks to develop a more rigorous financial plan,what will she have to do?

A low burn rate is an indication that the firm is losing cash at a faster rate than other firms in its industry.

In which scenario can firms achieve their objective by developing a relationship with a firm that offers factoring services?

The time value of money is the principle that a dollar received today is worth less than a dollar received in the future.

Net working capital is the difference between a firm's current assets and its fixed assets.

Financing provided by a firm's owners is classified as what type of financing?

Pro forma statements are idealized financial statements that show the firm's average financial performance over the past 10 years.

Today many financial managers accept the view that serving the needs of other stakeholders can be consistent with the goal of maximizing the value of the firm to its owners.

Snow International,a ski company in Canada,has 500 shares of outstanding common stock and has not issued any preferred stock.Net income is $27 500.What would be the earnings per share calculation?

What role does a factor play in providing short-term financing to a firm? Why would firms that rely heavily on credit sales find factoring attractive?

Which term is used to describe the use of debt in a firm's capital structure?

Financial managers usually focus almost exclusively on meeting the financial needs of their firms in the short run,leaving long-run financial issues to top management.

Investing in fixed assets would be classified as which type of budgeting?

Which ratio measures the extent to which a firm relies on debt to meet its financing needs?

Business Now: Change Is the Only Constant

Business Communication: Creating and Delivering Messages That Matter

Business Ethics and Social Responsibility: Doing Well by Doing Good

Economics: the Framework for Business

Business Formation: Choosing the Form That Fits

Small Business and Entrepreneurship: Economic Rocket Fuel

Accounting: Decision Making by the Numbers

Securities Markets : Trading Financial Resources

Marketing: Building Profitable Customer Connections

Part 1: Product and Promotion: Creating and Communicating Value

Part 2: Product and Promotion: Creating and Communicating Value

Distribution and Pricing: Right Product, right Person, right Place, right Price

Management, motivation, and Leadership: Bringing Business to Life

Human Resource Management: Building a Top-Quality Workforce

Managing Information and Technology: Finding New Ways to Learn and Link

Operations Management: Putting It All Together

The World Marketplace: Business Without Borders

Labour-Management Relations

Business Law

Personal Finance

Filters