BA 101 Final || A+ Verified.
Financial management correct answers the job of managing a firm's resources so it can meet its
goals and objectives
Finance activities correct answers preparing budgets, analyze current and predict future cash
flow, plan for financial expenditures
Undercapitalization correct answers when a company does not have enough capital to start or
continue running the business
Why do firms fail financially correct answers Undercapitalization, poor control over cash flow -
inadequate expense control
Financial managers and two responsibilities correct answers Use financial data to recommend
strategies for meeting and improving financial performance, Obtain funds in control funds
Short term forecast correct answers Predicts revenues costs and expenses for a period of one year
or less
Long-term forecast correct answers forecast that predicts revenues, costs, and expenses for a
period longer than 1 year, and sometimes as far as 5 or 10 years into the future
Budget correct answers expectation of revenues costs and expenses over specified period
Capital budget correct answers Spending plans for major asset purchase is that often require
large sums of money
Cash budget correct answers Estimates cash inflows and outflows during a particular period like
a month or quarter
Operating (master) budget correct answers A detail projection of all estimated income and
expenses based on forecasted sales revenue typically quarterly or over of the school year
What does an operating budget allow us to do correct answers Manage day by day needs of the
business, control credit operations, acquire needed material inventory, make capital expenditures
Trade credit correct answers Credit extend it to you by suppliers who let you by now and pay
later. Anytime you take delivery of materials, equipment or other valuables not paying cash on
the spot you're using trade credit
Secured loans correct answers loans backed by collateral that the bank can claim if the borrowers
do not repay them
Unsecured loans correct answers loans backed only by the borrowers' good reputation and
previous credit rating
, line of credit correct answers a given amount of money the bank will provide so long as the
funds are available
Revolving credit agreement correct answers a line of credit that's guaranteed but usually comes
with a fee
Debt financing correct answers Funds raised through acquiring loans that must be repaid
Equity financing correct answers The funds raised from within the frame from operations or
through sale of ownership in the firm
Term loan agreement correct answers The promissory note that requires the borrower to repay
the loan with interest in specified monthly or annual installments
Bonds correct answers Promissory notes or IOUs issued by corporations
Indenture terms correct answers The terms of agreement in a bond issue
Secured bond correct answers A bond issued with some form of collateral (i.e. real estate).
Unsecured (Debenture) Bond correct answers A bond backed only by the reputation of the
issuing company
A company can secure equity financing by correct answers Selling shares of stock in the
company, using retaining earnings as in reinvestments in the firm, attracting venture capital
Venture capital correct answers Venture capital firms invest in new emerging companies in
exchange for an ownership stake
No matter the size of the business, finance is a critical activity for what correct answers Profit
seeking and nonprofit organizations
Which of the following commonly results in the financial failure of a firm correct answers
Undercapitalization
Robert intends to major in business he has never had much interest in subjects with numbers. He
would like to avoid taking any finance courses if possible. Robert should correct answers Realize
that his success in business requires an understanding of financial issues
An important part of financial planning is understanding in determining the number of
employees to hire for short term needs such as holiday season. true or false correct answers true
Securities ( stock) markets are financial market places for stocks and bonds and serve what two
primary functions correct answers Provides funding or businesses, and provides private investors
a place to buy and sell stocks and bonds for personal investment
Financial management correct answers the job of managing a firm's resources so it can meet its
goals and objectives
Finance activities correct answers preparing budgets, analyze current and predict future cash
flow, plan for financial expenditures
Undercapitalization correct answers when a company does not have enough capital to start or
continue running the business
Why do firms fail financially correct answers Undercapitalization, poor control over cash flow -
inadequate expense control
Financial managers and two responsibilities correct answers Use financial data to recommend
strategies for meeting and improving financial performance, Obtain funds in control funds
Short term forecast correct answers Predicts revenues costs and expenses for a period of one year
or less
Long-term forecast correct answers forecast that predicts revenues, costs, and expenses for a
period longer than 1 year, and sometimes as far as 5 or 10 years into the future
Budget correct answers expectation of revenues costs and expenses over specified period
Capital budget correct answers Spending plans for major asset purchase is that often require
large sums of money
Cash budget correct answers Estimates cash inflows and outflows during a particular period like
a month or quarter
Operating (master) budget correct answers A detail projection of all estimated income and
expenses based on forecasted sales revenue typically quarterly or over of the school year
What does an operating budget allow us to do correct answers Manage day by day needs of the
business, control credit operations, acquire needed material inventory, make capital expenditures
Trade credit correct answers Credit extend it to you by suppliers who let you by now and pay
later. Anytime you take delivery of materials, equipment or other valuables not paying cash on
the spot you're using trade credit
Secured loans correct answers loans backed by collateral that the bank can claim if the borrowers
do not repay them
Unsecured loans correct answers loans backed only by the borrowers' good reputation and
previous credit rating
, line of credit correct answers a given amount of money the bank will provide so long as the
funds are available
Revolving credit agreement correct answers a line of credit that's guaranteed but usually comes
with a fee
Debt financing correct answers Funds raised through acquiring loans that must be repaid
Equity financing correct answers The funds raised from within the frame from operations or
through sale of ownership in the firm
Term loan agreement correct answers The promissory note that requires the borrower to repay
the loan with interest in specified monthly or annual installments
Bonds correct answers Promissory notes or IOUs issued by corporations
Indenture terms correct answers The terms of agreement in a bond issue
Secured bond correct answers A bond issued with some form of collateral (i.e. real estate).
Unsecured (Debenture) Bond correct answers A bond backed only by the reputation of the
issuing company
A company can secure equity financing by correct answers Selling shares of stock in the
company, using retaining earnings as in reinvestments in the firm, attracting venture capital
Venture capital correct answers Venture capital firms invest in new emerging companies in
exchange for an ownership stake
No matter the size of the business, finance is a critical activity for what correct answers Profit
seeking and nonprofit organizations
Which of the following commonly results in the financial failure of a firm correct answers
Undercapitalization
Robert intends to major in business he has never had much interest in subjects with numbers. He
would like to avoid taking any finance courses if possible. Robert should correct answers Realize
that his success in business requires an understanding of financial issues
An important part of financial planning is understanding in determining the number of
employees to hire for short term needs such as holiday season. true or false correct answers true
Securities ( stock) markets are financial market places for stocks and bonds and serve what two
primary functions correct answers Provides funding or businesses, and provides private investors
a place to buy and sell stocks and bonds for personal investment
