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Exam 18: Financial Management

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Question 151

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What is financial management? Identify the duties and responsibilities of financial managers.

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Financial management is the job of manag...

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Question 152

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The long-term financial forecast plays a crucial part in the company's long-term strategic plan.

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Question 153

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The concept,"time value of money" indicates:

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 bond represents a long-term debt obligation of a corporation or government.

With plans to build a $50 million theme park,Extreme Entertainment,Inc.intends to finance this project through the sale of additional shares of ownership in their firm.Selling new shares of stock represents ___________ financing.

A major concern for firms selling on credit is:

Farmers Savings and Loan agreed to extend Eckert's Orchards $200,000 of unsecured short-term funds,contingent upon the bank having the funds available.This arrangement represents a:

Through equity financing,stockholders become _________ of the firm.

Accountants truly represent the financial managers of a business.

"Good Finance or Bad Medicine," the topic title of the Making Ethical Decisions box,has an important message for managers who make financial decisions.Which of the following statements summarizes this passage's theme?

Factoring represents the least expensive way for a firm to raise short-term funds.

While finance is a critical activity for profit-seeking organizations,by definition nonprofit organizations are not required to fulfill the finance function.

Mini-Case Tishian's Funeral Home has been in business for over eighty years.Throughout its history,the firm has been a family-run operation.Today,the business is managed by Mort Tishian,a grandson of the founder.Unfortunately,Mort Tishian's tenure has been plagued with problems neither his father nor grandfather before him experienced.The reason is simple: the funeral business is undergoing rapid change.Small,family-owned funeral homes are losing ground to a new type of competitor,a large national network service that resembles a franchise system.More and more families "in their time of need" are choosing the new,highly promoted competitors instead of the traditional small family-operated funeral homes. This trend has required a response from organizations like Tishian's Funeral Home.Bigger and better facilities are needed to remain competitive.All of this puts more pressure on the family-owners to be more active in the financial side of the business.Mort summed it up best when he said,"Grandpa told people,'you pay me when you can,I ain't goin' nowheres.'" His creditors did the same with him.Today,it's a different game.Cash flow is key,and obtaining funds is no simple task.Additionally,creditors want their money now,not later.Banks are also more demanding."Heck,Grandpa knew all the bankers he dealt with personally.I see new faces every time I go to the bank.If things don't get better,I suspect after eighty years of service,Tishian's Funeral Home will have its own funeral." -Mort is seriously considering a major expansion in the size of his funeral home.The money spent on this type of project would be classified as a(n) :

As a financial manager of a small firm,Jerry needs to determine how much his company will have to borrow in the coming months,and when the borrowed funds will be needed.The preparation of the cash budget will help.

Energy-wise Builders,Inc,a leader in residential housing,recently negotiated a financing arrangement with First Pennsylvania Bank.The short-term funding agreement guarantees a specified amount of funds would be made available upon Energy-wise's request.This arrangement represents a:

According to an article on STLToday.com,"Anheuser Busch-InBev's tougher line toward suppliers has drawn fire.The U.S.division is losing some suppliers who can't adjust to the company's new policy of taking as long as 120 days to pay bills.Before the InBev takeover,Anheuser-Busch paid many of its accounts in 30 days." This news refers to the brewer's __________ policies.

By borrowing $10 million from First Dayton Bank,Hi-Lo Industries is utilizing ________.

The overall objective of financial planning is to:

The cost of capital is the rate of return a firm must earn in order to meet the demands of its lenders and expectations of its equity holders.