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