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Which strategy refers to the process of making multiple
payments across time
to allow an opportunity to reassess performance at
each point?
Staged funding
Syndication
Yield capitalization
Bootstrapping - ANSWER-This strategy refers to providing
seed funding so a prototype can be built and tested. Based on
the prototype's success, additional funds may be provided.
Which capitalization strategy would a company use if it
needed large sums of
capital, or if an entrepreneur is ready to sell some or all
its investment?
Staged funding
Strategic buyer
Initial Public Offering (IPO)
,Syndication - ANSWER-A company can offer its first sale of
common stock in the market to raise large sums of capital.
The Chief Financial Officer (CFO) of a toy company is
considering purchasing a
new piece of machinery to make manufacturing one of its
toy lines more
efficient and
sustainable.
Which type of decision does this
scenario involve?
Working capital management decisions
Capital structure decisions
Capital budgeting decisions
Financing decisions - ANSWER-The decision-making process
through which the firm purchases productive assets is called
capital budgeting, and it is one of the most important decision
processes in a firm.
A café decided to purchase a new industrial oven to efficiently
and effectively meet the increasing demand of its baked goods.
The Chief Financial Officer (CFO) is in the process of
determining how to pay for the new oven by either applying for
a bank loan, or by asking an individual to invest in the
company.
Which type of decision does this scenario involve?
Financing decisions
Capital budgeting decisions
, Working capital management decisions
Capital structure decisions - ANSWER-Financing decisions
determine the ways in which firms obtain and manage long-
term financing to acquire and support their productive assets.
Last year, a new bookstore. Since then, the store has become
increasingly popular, and the owner has had to hire additional
staff to help meet customer demand. The owner is in the
process of determining the best use of the store's increased
cash flows, as well as how much cash needs to be available
for the business to pay its employees every two weeks. Which
type of decision does this scenario involve?
Working capital management decisions
Capital structure decisions
Financing decisions
Capital budgeting decisions - ANSWER-Correct:Working capital
management refers to the management of current assets, such
as money owed by customers who purchase on credit,
inventory, and current liabilities, such as money owed to
suppliers.
Which two balance sheet account types are affected by
working capital
management decisions? Choose two
answers.
Current assets
Long-term assets