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Exam 18: Financial Management

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Question 41

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Most companies require long-term capital to purchase fixed assets such as plant and equipment,to develop new products and services,or to finance an expansion.

A) True
B) False

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Question 42

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The main objective of financial control is to establish priorities for the purchase of plant and equipment.

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B) False

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Question 43

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One of the most common ways for a firm to fail financially is poor control over cash flow.

One step in the financial planning process is to establish financial control procedures that allow managers to monitor the organization's performance.

In 2009,it was rumored that the previous owners of Skype (the internet calling service) ,were interested in buying it back from its current owner,eBay.The two entrepreneurs were said to be soliciting others who wanted to join them in the private ownership of this company.If they are successful in funding the venture in this way,the purchase of Skype would be financed with __________.

Inadequate expense control typically occurs as a result of undercapitalization.

When his firm is owed money,the financial manager tries to collect as early as possible.

The cost to a retailer of accepting credit cards is generally greater than the benefits provided.

One activity of the accounting function is to collect payments from overdue customer accounts.

Most companies have the ready cash available to make large purchases.

Which of the following activities is most likely to be performed by a financial manager?

To improve cash flow and profitability,effective managers attempt to minimize the firm's investment in inventory.

A firm's most recent financial statements often serve as the basis for predicting future sales,costs and expenses.

A revolving credit agreement represents a line of credit that is guaranteed.

After having visited several European resort towns,Daisy Doriddle wants to export her one-of-a-kind jewelry designs to tourist stores in several Mediterranean cities.A friend of hers who just graduated with her MBA from Northwestern University suggests that she seek the services of an international factor.As an international factor,Daisy should expect this intermediary to lend her (upfront)the total price she charges for each piece,and then wait for Daisy to sell her jewelry before asking for a percentage of the profits.

Money has time value due to the fact that if invested,it has the potential to earn more money at some point in the future.

Debt financing refers to funds acquired from the profitable operations of a firm or through the sale of ownership in the firm.

A capital budget combines all of the other budgets into one detailed plan for monitoring the operations of the firm.

Which of the following statements is most accurate?

As a finance manager at AllSports Communication,Charlie worries about the firm's borrowing requirements for the upcoming year.He knows the benefit of estimating AllSports' cash disbursements and short-term investment expectations.Facing these concerns,a(n) ________ would provide Charlie with valuable information by providing a good estimation of whether the firm will need to do short-term borrowing.