Which of the following would be most helpful for a company looking to know the income potential during the next five years?
long-term forecast
Which of the following situations represents a successful use of financial leverage?
A firm borrows money at 8% and earns an 11% return on its investment of these funds.
One of the challenges of effective financial management is:
to have sufficient cash on hand without compromising the firm's investment potential.
The effective management of accounts receivable requires financial managers to:
review the credit history of new customers.
Through equity financing, stockholders become _________ of the firm.
owners
________ examine the data prepared by ________ and then make recommendations to top management regarding strategies for improving the firm.
Financial managers; accountants
The managers of Dakota Clothing regularly compare their actual profits with the firm's projected profits. When deviations occur, the managers use the feedback to take corrective action when necessary. The management of Dakota Clothing is exercising financ
control.
Susan started a cake decorating business that failed. She is convinced that she lacked the necessary funds to promote her business and get it off the ground. Susan experienced:
undercapitalization.
After enjoying increased sales of and profits from several popular products, Braggs & Stritton plans to expand their production facilities. The firm, a well-known producer of lawn care products, prefers financing this project with a funding source that av
Retained earnings
A _________ forecast predicts the future cash inflows and outflows in future periods.
cash flow
Money has a time value because:
money earns interest over time.
The overall objective of financial planning is to:
optimize the firm's profitability.
If a firm sells shares of stock, it is financing with _______.
equity
As a management consultant, Lamont knows that regardless of how good his firm's product might be, the business has little chance of success without a(n):
financial plan.
Which of the following statements about taxes is accurate?
Profitable businesses usually pay taxes.
Venture capital firms look to invest their funds in firms that _________.
are new with great profit potential
A just-in-time inventory system allows a firm to:
reduce their investment in inventory.
Which of the following activities is most likely to be performed by a financial manager?
analysis of the tax implications of various managerial decisions
A _________ represents a long-term debt obligation issued by a corporation or a government.
bond
Arbor view Plant Science Company has invented a drought resistant grass seed that only needs watering three times each year. In order to expand distribution worldwide, the company whose product produces lush green foliage needs serious funding. The handfu
venture capital
To secure financing for a planned expansion, Ohio Electronics borrowed $400,000 from King Finance. The ________ loan agreement requires that Ohio Electronics provide the title to their factory as collateral.
secured
Acquiring funds through borrowing represents:
debt financing.
A(n) _____________ job includes forecasting, budgeting, cash flow analysis, cost control, taxes, and credit management.
financial manager's
A(n) __________ is responsible for verifying that the accounting procedures within a firm are consistent with established accounting principles.
internal auditor
When Preferred Pet Care Inc., a mobile veterinary care company, first started operations, it extended three months of credit to customers. It soon began to experience a cash flow problem. A finance professional was hired to:
manage accounts receivable.
Although best used as a last resort, many small businesses find it convenient to use __________ as a short-term source of financing. Although this form short-term debt comes with high interest rates, it provides a quick line of credit for many firms, incl
credit cards
Which of the following shows a firm's spending plans on fixed assets such as large equipment?
Capital Budget
Selling accounts receivable to obtain short-term funds is called:
Factoring
The finance manager at All Sports Communication has asked his assistant, Ben, to prepare the ________ budget. Ben will gather as much information as possible by utilizing the firm's other budgets and any documents that summarize proposed financial activit
master
Lancer Wholesale Company wants to improve cash flow. Which of the following strategies would be most likely to help Lancer achieve this objective?
Offering cash discounts to buyers who pay their accounts promptly