Financial Management (18 L.S.) Flashcards Preview

Business 121 > Financial Management (18 L.S.) > Flashcards

Flashcards in Financial Management (18 L.S.) Deck (42)
Loading flashcards...
1

A financial forecast that is for one year or less in considered a(n) ___ - ____ forecast.

short-term forecast

2

Which of the following is true about venture capitalist:
-They only operate in international markets
-They have assigned many major companies during start-up
-They invest in businesses with high potential
-They are a new method of raising capital in the U.S.

-They have assigned many major companies during start-up
-They invest in businesses with high potential

3

A long-term forecast's time period is generally more than...

1 year
-they are sometimes as long as 5 or 10 years!

4

What are the three steps in the financial planning process in order?

1-forecasting the firm's short-term and long-term financial needs
2-developing budgets to meet those needs
3-establishing financial controls to see whether the company is achieving its goals

5

Items that may back a secured bond include:

-real estate
-machinery and equipment

6

Financial management is about managing a firm's ____, so that it can meet its goals and objectives.

Resources
-including all of the firms assets, which include funds (cash), and other short-term assets and long-term assets.

7

The risk/return trade off principle means that...

The greater the risk for a lender making a loan, the higher the interest rate.

8

Unsecured, short-term funds a bank will lend to a business, provided the funds are readily available, as called a(n):

Line of credit

9

Finance is the function of acquiring and managing ____.

Funds

10

Which of the following is a capital expenditure:
-Building and equipment
-Land
-Patents and copyrights
-Inventory and materials

-Building and equipment
-Land
-Patents and copyrights
--Long-term assets and investments in these are capital expenditures

11

The firm that buys goods and services on a given day, but pays for them later using a(n) ____ credit.

Trade

12

____ are the owners of a public corporation.

Stockholders

13

Which of the following about commercial finance companies are true:
-They make short-term loans
-They are almost always small businesses
-They were made illegal in 2008 financial crisis
-They charge higher rates than banks
-They want borrowers to offer tangible assets as collateral

-They make short-term loans
-They charge higher rates than banks
-They want borrowers to offer tangible assets as collateral

14

Money invested in a new or emerging companies that investors believe have great profit potential is...

Venture capital

15

A firm raising funds through various forms of borrowing with the intent to pay it back is using ___ financing.

Debit financing

16

Which of the following are true about factoring accounts:
-it is the accounts receivable of a firm sold for a discount
-Factoring is a new business process started in the 1990's
-The firm that buys the accounts receivable collects the amount due
-It is very rare today
-Small businesses often use it for financing in the short term

-it is the accounts receivable of a firm sold for a discount
-The firm that buys the accounts receivable collects the amount due
-Small businesses often use it for financing in the short term

17

Firms will leverage (raise needed funds through borrowing) because it will...

increase a firm's rate of return on ownership's investment

18

Firms will leverage (raise needed funds through borrowing) because it will...

increase a firm's rate of return on ownership's investment

19

A line of credit that is guaranteed but usually comes with a fee is called...

revolving credit

20

A ____ ____ forecast is part of a short-term forecast to predict monies coming in and going out of a firm.

Cash Flow

21

Which are correct statements about pledging:
-It is illegal under the Sherman Antitrust Act
-As accounts receivable is paid, the money is forwarded to the lender as repayment of the loan
-A firm's accounts receivable is used as basis for loan
-It is a promise to buy a firm's product in the future
-The firm gets a percentage of accounts receivable pledged as a loan

-As accounts receivable is paid, the money is forwarded to the lender as repayment of the loan
-A firm's accounts receivable is used as basis for loan
-The firm gets a percentage of accounts receivable pledged as a loan

22

A(n) ___-____ agreement is a promissory note that requires the borrower to repay the loan with interest in specified monthly or annual installments.

Term-Loan

23

A loan backed by collateral, something valuable like property, is called a(n)...

Secured loan

24

Items that may back a secured bond include:
-Machinery and equipment
-Personal promise to pay
-Real estate
-Long-term goodwill on balance sheet

-Machinery and equipment
-Real estate

25

When a firm decides on a bond term, interest and repayment date, the ____ is being prepared.

indenture

26

Financial control is a process though which a firm periodically compares its budget to which of the following:
-Revenues
-Cost
-Expenses
-Stock price

-Revenues
-Cost
-Expenses

27

When a firm is not putting an asset up as collateral for a loan, the loan is considered....

unsecured

28

When a firm sells its accounts receivable at a discount in return for cash, the firm is....

Factoring

29

Three types of main budgets in financial management include:

-Capital budget
-Cash budget
-An operating or master budget

30

A(n) ____ bond is one that is backed by assets which may be claimed if the bond's interest is not paid.

Secured bond