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Exam 17: Financial Management Appendix C Managing Risk

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Question 21

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By purchasing stock in Entertainment Today,Veronica has become a(n) ______the company.

A) creditor of
B) general partner of
C) owner in
D) venture capitalist in

E) A) and B)
F) A) and C)

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Question 22

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Corporations that issue stock to raise long-term funds accept the legal obligation to repay the amount borrowed.

A) True
B) False

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Question 23

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

Owners of ______shares do not get a vote but stockholders do receive dividends.

The first step in the financial planning process is:

The overall objective of financial planning is to:

The most widely used source of short-term funding is trade credit.

Financial managers are responsible for accounts receivable and accounts payable management.

Which of the following would not normally involve long-term financing?

The importance of financial managers to firms with large inflows is greater than for firms with smaller cash flows.

The terms 2/10,net 30 indicate that the seller is offering a 10% discount for early payment.

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

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

A comptroller is responsible for the acquiring and managing of funds for an organization.

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

Explain the role the operating budget,the capital budget,and the cash budget play in financial planning.

By selling shares of ownership in their company,Ottawa Scientific acquires the funds needed to finance their research and development projects.Ottawa Scientific provides for their long-term funding needs through______ financing.

Capstone Financial Services is considering the purchase and installation of an expensive computer network.This is the type of expenditure that would be included in a(n) :

Business organizations exclusively use long-term financing for their short-term and long-term needs.

An effective strategy to manage cash flows requires retail businesses to eliminate their inventory.