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Exam 18: Financial Management

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Question 161

True/False

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One very important responsibility of the finance department in both large and small businesses involves acquiring needed funds to operate the business.

A) True
B) False

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Question 162

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As the owner of Kingdom's Treasures,Jerry negotiates with suppliers who hope to place their products in his high volume retail gift store.Jerry finances his inventory through the ________ credit offered by suppliers who delay his payments for up to 60 days after the merchandise has been delivered to his business.

A) residual
B) trade
C) commercial
D) LIFO

E) A) and B)
F) None of the above

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Question 163

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Retained earnings represent a source of equity financing.

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.

Financial managers are responsible for buying merchandise on credit and collecting payment from accounts receivable.

Effective financial managers evaluate customers' ability to pay for merchandise purchased on credit.

Bill is a financial manager for Great View Eye Care,a local chain of Milwaukee retail stores offering glasses and optical health care.The majority of Bill's day likely involves efforts to locate and secure long-term financing to fund Great View Eye Care's capital expenditures.

Financial managers devote the majority of their time obtaining long-term financing to fund the firm's capital expenditures.

The finance manager at Preferred Pet Care Inc has asked the company's accountant to prepare a report that shows the amount the firm is spending monthly on veterinary supplies for its western suburb service area,in the hopes of negotiating better payment terms with its suppliers.The purpose of this effort is to increase cash levels within the firm.

If a firm sells shares of stock,it is financing with ________.

Delaware Aluminum uses its stock of unsold aluminum products as collateral for a short-term loan.This arrangement represents:

The most widely used source of short-term funding is:

If you are at the Phoenix Sky Harbor International Airport,you will no longer get a pat-down if you go through the metal detector.The airport now has full body screening ports that scan the entire body and readily detect weapons or explosive devices that someone may want to take on board a plane.These expensive devices represent: