Exam 16: Mastering Financial Management

Rick's Wholesale Office Supplies prefers to handle its accounts receivable itself, but it also needs to use them to facilitate short-term borrowing. What can Rick's do?

If money is reserved each year to guarantee that a bond will be paid off at maturity, the money will be held in a ____ fund.

The denominations for corporate bonds range from $1,000 to $50,000.

Each of the following causes a cash flow problem except

Effective financial management involves careful planning to determine the best financial sources and to ensure that projected uses are in keeping with the organization's goals.

​Common stockholders have the right to ___, but preferred stockholders do not have this right.

The Nasdaq only carries small company's stocks; by regulation, large firms' stock must trade on the NYSE, not on the Nasdaq.

​Suppose Sears Roebuck & Company dissolved. After creditors are paid, what is the name of the next group to have claim on profits and assets?

Although Hargrove Co. makes enough money to pay for everything it needs, it still chooses to have some debt and pay a larger portion of retained earnings back to the stockholders. What is likely the best explanation for this decision?

Maria has been asked by top management to develop financial ____ that the company will achieve over the next one- to ten-year period.

When Platinum Fitness sells its accounts receivable to a financial institution, it receives less than the full value of the accounts receivable. Which of the following is a benefit Platinum Fitness receives from this arrangement?

Short-term financing not backed by collateral is called

It is not necessary to give most lenders a current business plan or audited financial statements when requesting a long-term business loan.

The maturity date is the date on which the corporation is to repay the money borrowed from bondholders.

The steps in effective financial planning are

​A written order for a bank to pay a third party a stated amount of money on a specified date is a

Bonds that are secured by various assets of the issuing corporation are called debenture bonds.

​Money invested in small firms that have the potential to become very successful is called

It is not unusual for companies to issue ____ type(s) of common stock and ____ type(s) of preferred stock.

If a firm's earnings should drop below the interest cost of borrowed money, the return on owners' equity will increase.