Intro to Business Chapter 16: Mastering Financial Management

Which of the following forms of debt financing is unlikely to be used by a firm the size of Moonworks?

Commercial paper

If a nonprofit organization needs to raise funds for a building project, it could issue _____ , which are backed only by the organization's reputation.

Debenture bond

When Jim Moon wanted to buy his firm's building instead of renting it, to which of the following types of funding did he turn?

Debt capital

Like many small businesses in the early stages, founder Jim Moon self-financed Moonworks. When the founder provides the primary funding for a small business, she or he is employing which form of financing?

Equity capital

When a corporation needs money for long-term financing, where could it obtain these funds without the requirement of repayment?

Equity capital

_____ consists of all the activities concerned with obtaining money and using it effectively.

Financial management

When a lender seeks collateral for a loan it can use almost any asset as security, but prefers _____ when seeking tangible security and may insist that it be stored in a public warehouse with the lender keeping the warehouse receipt.

Finished goods

Short-term financing is often sought by businesses for a variety of purposes. Which of the following is not usually one of the reasons businesses obtain short-term financing?

Increase cash in accounts for accounting purposes

Snap, a long time privately held corporation, raised $3.4 billion when it sold stock on the New York Stock Exchange for the first time in 2017. Snap is the parent company of Snapchat and sold the stock with the goal of using the funds raised for further development of Snapchat and growing the company into a major player in the social media industry. What kind of sale was this?

Initial public offering

When individuals use their home computers to buy and sell stock that is not listed on a securities exchange, they are participating in the _____ , which has existed since long before home computers were invented.

over-the-counter

Businesses have four primary sources of funds. _____ generally provides the greatest part of a firm's financing.

sales revenue

If Boeing needed a short-term loan of over $100,000 to finance its accounts receivable, which of the following would most likely be the least expensive option and involves the least risk for Boeing?

Commercial paper

Typical job titles in finance include chief financial officer, vice-president of finance, bank officer, consumer credit officer, financial analyst, financial planner, loan officer, insurance analyst, and investment account executive. Which of the following is not one of the qualifications to have a career in finance?

A post-graduate degree

When a business purchases goods and pays for them with a written order for a bank to pay the seller a stated amount of money on a specific date, what has it provided for payment?

Banker's acceptance

What has a company accomplished when it creates a financial statement that projects income and expenditures over a specified future period?

Budgeting for financial needs

When Bank RI or any other bank assesses whether a business is creditworthy and capable of repaying a long- or short-term debt obligation, one of the first things they consider is the movement of money into and out of the firm, also known as

Cash flow

Which of the following is not a reason it is usually easier to obtain short-term debt financing than long-term debt financing?

Lenders of short-term loans do not require collateral.

To help Moonworks expand and exploit opportunities it recognized, Bank RI granted a ______, which is a loan that is approved before the money is actually needed.

Line of credit

When a business needs additional money to continue operations it has several options available to it. One option, a ______ , is an arrangement with the lender in which a loan is approved before the money is actually needed. While the loan is preapproved, which permits the loan to be made without delay, there is no guarantee that the lender can make the loan because the loan is contingent on the lender having sufficient funds available to make the loan.

Line of credit

When a corporation needs a larger amount of money than is possible by borrowing from one lender, or it does not want to borrow it all from one lender, which of the following might it use?

corporate bond

Which KPI would you present to Shaun?

Number of visitors to the website who actually make purchases (conversion rate)

What should you tell Shaun?

Outsource the system

_____ provides a safe place to store money but normally generates the lowest interest income of any account.

Passbook-savings account

When an individual purchases merchandise in a retail store using a credit or debit card which they insert into or swipe through a magnetic card reader, what type of electronic banking service are they using?

Point-of-sale terminals

Which plan do you want to pursue?

Promote discounts through social media

_____ refers to the time lag between the actual production of goods and when the goods are sold.

Speculative production

If a business needs a short-term loan it could ____ seek from its suppliers, which is usually available to all businesses with good credit and extended to the buyer without a finance charge.

Trade credit

In the traditional approach, each new budget is based on the dollar amounts contained in the budget for the preceding year; however, in a(n) ____ every expense in every budget must be justified.

Zero-base budget