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Exam 17: Financial Management

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Question 61

Multiple Choice

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Victoria Nursery offers customers credit terms of 3/15 net 30.This gives customers a:

A) fifteen percent discount if they pay in three days.
B) three percent discount if they pay in thirty days.
C) three percent discount if they pay in fifteen days.
D) fifteen percent discount if they pay in thirty days.

E) B) and D)
F) A) and C)

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Question 62

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A cash budget helps managers anticipate borrowing,debt repayment,operating expenses,and short-term investment opportunities.

A) True
B) False

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Question 63

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Financial managers are responsible for controlling cash flows.

The managers of Dakoti Clothing regularly compare their actual profits with the firm's projected profits.When deviations occur,the managers use the feedback to take corrective action when necessary.The management of Dakoti Clothing is exercising financial:

To reduce the time and expense of collecting accounts receivables,some firms:

A firm's short-term financial forecast provides an estimate of sales.

Firms can acquire funds through borrowing,selling ownership,or retaining earnings.

The time value of a dollar reflects the interest that could be earned by investing that dollar.

Which of the following is the most popular way of raising cash among small businesses?

Describe some of the operational needs for which funds must be readily available to a company.

A budget reflects management's expectations for revenues and required resources.

The capital budget is the most detailed and most used budget a firm prepares.

Commercial finance companies normally charge lower rates on short-term loans than those charged by commercial banks.

By borrowing $10 million from the First Newfoundland Bank,Cain Industries utilizes

Which of the following suggests that higher interest rates are charged to high risk borrowers?

In an effort to reduce the risk of lending money,banks require that some borrowers pledge certain types of assets as collateral.

As a result of cash flow shortages,Kellco Department Stores has fallen behind in payments to suppliers.Some suppliers are withholding shipments to Kelco until they receive payments on overdue accounts.To meet their immediate needs,Kellco Department Stores should utilize:

New World Chemical does not offer customers a cash discount for early payment of their accounts receivable.As a result,most customers wait to pay their bill on the last day before late penalties are charged.These customers apparently understand the:

The first step in financial planning is to develop a budget to better control costs.

___________ is a source of long-term equity financing.