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Exam 17: Financial Management

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Question 1

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Explain the role the operating budget,the capital budget,and the cash budget play in financial planning.

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An operating budget is the projection of...

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Question 2

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A ________ refers to a line of credit that is guaranteed by the bank.

A) collateral trust fund
B) revolving credit agreement
C) contract credit agreement
D) commercial credit agreement

E) C) and D)
F) None of the above

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B

Question 3

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Tax payments represent a cash inflow to a firm.

Sound financial management involves determining the most appropriate sources of funds to meet the short-term and long-term needs of an organization.

Maple Leaf Innovations is planning to purchase a sophisticated supercomputer in the next year that will cost over $43,000,000.This purchase would be included in Maple Leaf's capital budget.

Capital expenditures are major investments in long-term assets such as equipment,and trademarks.

Typically,only highly regarded customers of a bank receive:

If a buyer is offered the terms of sale of "3/10,net 30" this means that the buyer can receive a 10 percent discount by making full payment within 3 days of the billing date.

As the chief financial officer (CFO)for a medium-sized service company,Shelley is concerned about the possibility of temporary cash shortages.Given the irregular cash flows from seasonal sales,she wants to ensure that her company's bank will provide adequate funds to cover any potential cash flow problem.The best strategy to ease Shelley's concern would be to arrange a revolving credit agreement with the bank.

Manitoba Supply offers their customers trade credit with terms 2/15 net 30.This implies that:

When Libertine Industries renegotiated their loan agreement,they borrowed an additional $2 million.The new loan requires Libertine to repay the new amount in nine months.Liberty's activity represents ________ financing.

A loan that requires the borrower to provide collateral represents a:

___________ offer short-term secured loans to high-risk borrowers.

Short-term financing refers to borrowed funds that will be repaid in a year or less.

Debt financing exclusively provides funds to satisfy short-term financing needs.

Managing a firm's resources so that it can meet its goals and objectives is the goal of financial accounting.

Financial managers generally oppose credit sales because of the impact on cash flows.

Which of the following would not normally involve long-term financing?

Corporations that issue debenture bonds are required to provide collateral.

What is the overall objective of financial planning?