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Exam 18: Financial Management

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Question 151

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Luna, the owner of Pages and Pages Booksellers, is seeking additional financing for books that she plans to buy and sell in the same fiscal year. Even though it will be a sizeable investment in inventory, Luna is seeking short-term financing.

A) True
B) False

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Question 152

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Suppliers prefer to offer trade credit to customers with poor credit ratings or no credit history.

A) True
B) False

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Question 153

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Explain the term leverage. When is it more favorable for firms to use this strategy?

Much of a financial manager's day-to-day activities involve managing the short-term financial needs of the firm.

A term-loan agreement requires the borrower to repay the loan in one lump sum at the end of the loan period.

Identify and describe three types of short-term financing.

Riley, a new graduate with a finance degree, was recently hired by a large corporation to work in tax management. Riley's goal is

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

The indenture terms refer to the agreements of a bond issue, such as how much interest it promises to pay and when it promises to repay the issue.

Accountants truly represent the financial managers of a business.

Finance managers spend the majority of their time managing

Marcus, a management consultant, knows that regardless of how good his firm's product might be, the business has little chance of success without a(n)

One of the challenges of effective financial management is

A budget's primary purpose is to provide managers with a financial summary of past operations.

The rate of return a company must earn to meet the demands of its lenders and expectations of its equity holders is called

Financial control is a process where firms compare actual revenues and costs with budgeted revenues and costs.

Tax payments are important to the finance manager because they represent a cash inflow to a firm.