Business x100 - Chapter 18. Assigned Reading and Pre-class Quiz on Financial Management
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
Is it more common for a firm to fail due to lack of sales or poor financial management?
Poor financial management
Needs for operating funds include ______. (Select all that apply)
acquiring needed inventory making capital expenditures controlling credit operations
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 the basis for making decisions
budget
Capital, cash, and operating are three types of ___
budgets
Major investments in either tangible long=term assets such as land, or intangible assets such as patents are considered to be _____ expenditures.
capital
Because firms must meet the demands of its lenders and the expectations of its equity holders, firms are very concerned with the _____.
cost of capital
The rate of return a company must earn in order to meet demands of its lenders and expectations of its equity holders is called the _____
cost of capital
Financial control is a process through which a firm periodically compares its budget to which of the following? (Select all that apply)
costs expenses revenues
Unless special conditions have been agreed upon, there is usually no management influence in _____ financing.
debt
When a corporation finances expansion with _____, there is usually no influence on management. If they use _____ financing by selling stock, the common stockholders have rights.
debt; equity
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
The ___ department is responsible for preparing budgets, preparing cash flow, analysis, and planning expenditures
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
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
What are the three most common reasons firms fail financially?
inadequate expense control undercapitalization poor control over cash flow
Careful control of a firm's ______ costs allows it to maintain correct levels of stock and product.
inventory
Select those items that are considered to be a capital expenditure. (Select all that apply)
land patents and copyrights buildings and equipment
_____ means to raise funds through borrowing to increase a firm's rate of return.
leverage or leveraging
A forecast that predicts more than a year in the future is called a(n) ___-___ forecast
long-term
What are the three most common types of budgets in a firm's financial plan?
master budget capital budget cash budget
_____ funds are typically needed to manage day needs of a business as well as acquiring needed inventory.
operating
A(n) ___ forecast predicts revenues, costs, and expenses for a period of one year or less
short-term
Short-term financing is more important to a small business than long-term financing because _____.
small businesses are more concerned with funding day to day operations