Busi chapter 18

What are the three most common reasons firms fail financially?

- undercapitalization - inadequate expense control - poor control over cash flow

Place the three steps in the financial planning process in order from beginning to end with the first step at the top.

1. forecasting the firm's financial needs 2. developing budgets 3. establishing financial controls

When a company allocates the use of specific resources throughout the firm based on a financial plan indicating management's expectations, then the company is using a(n)————as a basis for making decisions

Budget

is a financial plan that sets forth management's expectations and, on the basis of those expectations, allocates the use of specific resources throughout the system.

Budget

What form of financing takes place when the merchant accepts payment immediately from the bank and the customer agrees to repay the bank?

Credit cards

financing is funding raised through various forms of borrowing that must be repaid.

Debt

True or false: Financial management is only concerned with items involving cash.

False

__________funds are typically needed to manage day to day needs of a business as well as acquiring needed inventory.

Operating

————funds are typically needed to manage day to day needs of a business as well as acquiring needed inventory.

Operating

term forecast is usually for one year or less.

Short

value of money is the idea that money in your possession today is worth more than money that will be in your possession in the future.

The time

True or false: A budget is a tool for financial planning.

True

Major investments in either tangible long-term assets such as land, or intangible assets such as patents are considered to be ______ expenditures.

capital

During tough economic times, customers are happy when firms extend ______ for purchases.

credit

Functions of financial management do NOT include ______.

ensuring employees are paid fairly

The three steps in the financial planning process are to forecast the firm's short- and long-term needs, develop budgets, and ______.

establish financial controls

In any business, funds come into and go out of a business. What business function acquires funds for the firm and then manages those funds on a day-to-day basis?

finance

In financial planning, what is the process in which a firm periodically compares its actual revenues, costs, and expenses, with its budget?

financial control

Select the steps in financial planning.

forecasting short term needs develop budgets establish financial controls

Finance is the function of acquiring and management of ______.

funds

What inventory management procedure helps a firm to control inventory costs?

implementing a just-in-time inventory control method

Needs for operating funds include ______. (Select all that apply)

making capital expenditures acquiring needed inventory controlling credit operations

Money is considered to have a time value because Blank______.

money has more value in your possession today than at a later point in the future

Is it more common for a firm to fail due to lack of sales or poor financial management?

poor financial management

Financial control is a process through which a firm periodically compares its budget to which of the following?

revenues costs expenses

As a function of financial management, financial managers must understand tax regulations because ______.

they must consider the tax implications of major decisions businesses want to minimize taxes

Short-term forecasts generally cover up to a ______.

year