Financial Management
Financial leverage:
reflects the firm’s commitment to fixed, financial assets
has no impact on the earning of the firm
reflects the amount of debt used in the capital structure of the firm
primarily affects the left side of the balance sheet
reflects the amount of debt used in the capital structure of the firm
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A cash discount may best be defined as:A. a reduction in price if payment is made within the specified time period
B. a discount offered to critical suppliers
C. a discount applied to volume sales
D. a discount or the repayment of the firm’s debt
Commercial paper may best be defined as:
A. a short term obligation of the government issued to commercial investors
B. short term unsecured promissory notes issued by corporations
C. an insignificant source of funds to large corporations
D. the debt obligations of chartered banks
The field of finance is closely related to the fields of:
A. statistics and economics
B. statistics and risk analysis
C. economics and accounting
D. accounting and comparative return analysis
The extent to which inventory financing may be employed is based on all of the following, except:
A. the marketability of the pledged goods
B. their associated price stability of the goods
C. the perishability of the goods
D. the control of the goods by the manufacturer
Which of the following properly lists balance sheet items in order of liquidity, from most liquid to least liquid?
A. Accounts receivable, inventory, marketable securities, cash.
B. Cash, marketable securities, accounts receivable, inventory.
C. Inventory, marketable securities, cash, accounts receivable.
D. Cash, inventory, accounts receivable, marketable securities.
If interest or compounding is done on other than an annual basis, adjust by:
A. dividing the number of years by the number of compounding periods
B. multiplying the number of years by the number of compounding periods
C. dividing the interest rate by the number of compounding period
D. multiplying the years and dividing the interest rate by the number of compounding periods
Amortization is considered a source of funds to the firm because:
A. it is purely an accounting entry and doesn’t involve a direct disbursement of funds, freeing up these funds for other investments
B. it represents a reduction in asset holdings
C. it represents an increase in an asset account
D. amortization is not a source of funds
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