MIE201 Chapter 18 Questions

Which of the following represents an agreement lenders make with borrowers which gives those borrowers capital that can be utilized at any time after a loan is​ authorized? A. Capital investment B. Collateral C. Line of credit D. Equity E. ​Start-up budget

C. line of credit

A method that requires departments to commence their financial year with nothing in their​ budget, compelling departments to indicate how funds are spent in order to validate each item that goes into the​ budget, is known as​ _________. A. hedging B. debt financing C. ​zero-based budgeting D. ​short-term financing E. leveraging

C. zero based budgeting

To determine overall direction and ascertain a need for major​ investments, a firm should consider​ what? A. A strategic plan B. Financial management acumen C. ​Risk/return trade-off D. Financial plans E. The external financial environment

A. a strategic plan

Which of the​ "five C's" for considering loan applications involves examining a​ company's debt and liquidity ratios and even private​ finances? A. Capacity B. Collateral C. Character D. Capital E. Conditions

A. capacity

When determining how to buy inventory at the lowest costs​ possible, what do financial and operations managers​ use? A. Economic order quantity B. Strategic plans C. ​Risk/return trade-off D. Liquidity E. Working capital

A. economic order quantity

Which term defines the amount of materials​ that, when ordered​ strategically, results in the lowest ordering and storage​ costs? A. Economic order quantity B. Operating budget C. ​Risk/return trade-off D. Debentures E. Financial plans

A. economic order quantity

Which of the following involves defending against rate surges with agreements that businesses can purchase resources in the future at predetermined​ prices? A. Hedging B. Prospectus C. ​Zero-based budgeting D. Leveraging E. Financial control

A. hedging

If a firm is considered to be highly​ leveraged, what does that mean for the​ firm's finances? A. The firm carries a lot of debt. B. The firm is poised to take advantage of competitors. C. The firm has higher​ risk/return trade-off. D. The firm can take advantage of downturns in the economy to gain market share. E. The firm spends more than average on advertising.

A. the firm carries a lot of debt

A​ ______ tends to have lower interest rates and can be replaced at the​ possessor's preference and transformed into common stock of the issuing company. A. secured bond B. convertible bond C. lease D. bond E. debenture

B. convertible bond

______ consists of organizing and gathering capital by selling shares of the company stock. A. Debt financing B. Equity financing C. Capital budgeting D. ​Short-term financing E. Long-term financing

B. equity financing

​_______ refers to the method of examining and altering a simple financial plan to account for abnormalities stemming from forecasted events. A. Factoring B. Financial control C. Leveraging D. Project budgeting E. Hedging

B. financial control

The equilibrium between possible threats and prospective compensation is known as​ ________. A. accounts receivable B. risk/return trade-off C. hedging D. ​zero-based budgeting E. financial planning

B. risk/return trade-off

The bills a firm owes to its​ vendors, lenders, and other parties are called​ __________. A. economic order quantity B. working capital C. accounts payable D. accounts receivable E. liquidity

C. accounts payable

When managers provide input as to the amounts they need to run their​ departments, what type of budgeting approach is being​ used? A. Financial control B. Rolling forecasts C. ​Bottom-up requests D. Hedging E. ​Top-down mandate

C. bottom up requests

​______ involves collecting money owed to a business. A. Cost of capital B. Accounts payable C. Hedging D. Accounts receivable E. Zero-based budgeting

D. accounts receivable

When a company must sell its accounts receivables in order to acquire capital because its customers are taking too long to pay their​ bills, it is called​ ______. A. equity financing B. prospectus C. debt financing D. factoring E. capital budgeting

D. factoring

Which of the following methods of securing funds has the most​ long-term and significant effect on an​ organization? A. Factoring B. Trade credit C. Corporate bonds D. Selling debt E. Selling equity

E. selling equity

​_________ involves the goal of holding on to cash as long as possible. A. Hedging B. Cost of capital C. Accounts receivable D. ​Zero-based budgeting E. Accounts payable

E. accounts payable

Which of the following refers to a financial guide for a given period of​ time? A. Financial control B. ​Top-down mandate C. Financial plans D. ​Bottom-up request E. Budget

E. budget

The total mix of debt and equity a company uses for its capital needs is called​ what? A. Opportunity costs B. Rate of return C. Leverage D. Equity financing E. Capital structure

E. capital structure

​A(n) ____ pinpoints the expenses required to successfully complete an assignment. A. capital budget B. ​zero-based budget C. ​start-up budget D. operating budget E. project budget

E. project budget

Which of the following is a formal document necessary for the SEC to review which presents material about a​ company, its​ capital, and its strategies for utilizing the future capital it hopes to​ raise? A. Private equity B. Convertible bond C. Commercial paper D. Debenture E. Prospectus

E. prospectus