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Exam 18: Financial Management

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Question 21

True/False

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

A) True
B) False

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Question 22

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

A) True
B) False

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Question 23

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Which of the following represents a source of short-term funding?

Which of the following is a primary area of concern for financial managers?

With added competition, firms prefer not to offer the availability of credit sales to their customers.

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

Retained earnings represent a source of equity financing.

To be effective, an internal auditor must be critical of any improprieties or deficiencies found in the financial activities of the firm.

________ refers to the process that identifies variances by comparing actual revenues and expenses to projected revenues and expenses.

Akiko realizes the importance of developing a ________ for her interior design business. Akiko understands the importance of appropriately allocating resources in order to achieve the goals of her firm.

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

Corporations that issue debenture bonds are required to provide collateral.

A line of credit represents a guarantee from a bank to lend a firm a given amount of money.

The interest paid on ________ represents a tax-deductible business expense.

After earning $50 million in net income, Marshall Manufacturing distributed $15 million in dividends to their stockholders. Marshall's board of directors decided to invest the remaining $35 million back into the business. This $35 million reinvestment of profits represents

Which of the following represents a capital expenditure?

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

Budgets assist managers in performing the functions of planning and control.

An operating budget analyzes the firm's spending plans for long-lasting assets that require large sums of money.

As a financial manager at Marshall Manufacturing, Chase is exploring sources of long-term funds to finance the construction of Marshall's newest plant. Chase would prefer a funding source that does not require interest payments or involve major underwriting fees. Chase will consider using retained earnings to fund the construction project.