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Subject
Business
Date
May 1, 2024
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Pages
1
Uploaded by LieutenantWolverinePerson1109 on coursehero.com
Contemporary Business Chapter 18
Date / Time
Student Score
Passing Score
Result
March 15, 2024
2:14 am
93.54
50
Pass
Contemporary Business Chapter 18
#
Question
Correct Answer
Student Answer
Result
Points Awarded
1
From what Marco has shared, how would you advise Marco to proceed?
Marco can assess his short-
term financial structure by
measuring working capital
through the use of his balance
sheet and subtracting current
liabilities from current assets.
Marco can assess his short-
term financial structure by
measuring working capital
through the use of his balance
sheet and subtracting current
liabilities from current assets.
Correct
1
2
Which is more likely?
Marco should balance
inventory needs by making
sure there is sufficient
inventory on hand to meet
customer demand but not so
much that day-to-day
operations are compromised
by having too much cash tied
up in inventory.
Marco should balance
inventory needs by making
sure there is sufficient
inventory on hand to meet
customer demand but not so
much that day-to-day
operations are compromised
by having too much cash tied
up in inventory.
Correct
1
3
Used to pay day-to-day expenses. Many organizations maintain a minimum balance in order to have funds
available for unexpected expenses.
cash
cash
Correct
1
4
Low-risk investments with short maturities that can be easily sold in secondary markets. Used as an investment
vehicle for cash that is not needed immediately.
marketable securities
marketable securities
Correct
1
5
Uncollected credit sales that may represent a significant portion of a company’s assets. Companies need to
ensure regular collection of outstanding credit sales, while still offering sufficient credit to customers to generate
additional sales.
accounts receivable
accounts receivable
Correct
1
6
Often the largest single asset for retailers and represents goods that are either available for sale or being
converted into items available for sale. This includes working capital management, measured as current assets
less current liabilities.
inventory
inventory
Correct
1
7
Investments in long-lived assets that are expected to produce economic benefits for more than one year. These
investments require a substantial amount of money.
capital investment
capital investment
Correct
1
8
Includes activities that reduce the risks associated with exchange rate fluctuations. One such tool is balance sheet
hedging.
international assets
management
international assets
management
Correct
1
9
In reviewing his balance sheet, Marco calculates that Cutting Edge has financed 70% of its assets through equity
and 30% through debt. Help Marco by identifying what this is called.
capital structure
capital structure
Correct
1
10
If Marco follows Ardala’s advice, which of following funding / capital structure options would he be implementing?
leverage
leverage
Correct
1
11
A company’s mix of debt and equity
capital structure
capital structure
Correct
1
12
Borrowing money from the bank
debt capital
debt capital
Correct
1
13
A company issuing shares
equity capital
equity capital
Correct
1
14
Borrowing money with the goal of increasing returns on equity
leverage
leverage
Correct
1
15
Securing a 5-year bank loan to purchase equipment
mixing short-term and long-
term funds
mixing short-term and long-
term funds
Correct
1
16
Management’s decision to use debt instead of equity
capital structure decision
capital structure decision
Correct
1
17
Management’s decision to issue regular dividends
mixing short-term and long-
term funds
capital structure decision
Incorrect
0
18
Securing a line of credit for inventory
mixing short-term and long-
term funds
mixing short-term and long-
term funds
Correct
1
19
Reinvested earnings
equity capital
equity capital
Correct
1
20
Management’s commitment to relying on less debt
capital structure decision
capital structure decision
Correct
1
21
Review the email and determine what method of short-term funding the sender is likely suggesting.
commercial paper
commercial paper
Correct
1
22
Review the email and determine what method of short-term funding the sender is likely suggesting.
factoring
factoring
Correct
1
23
Review the email and determine what method of short-term funding the sender is likely suggesting.
trade credit
trade credit
Correct
1
24
Review the email and determine what method of short-term funding the sender is likely suggesting.
revolving credit agreement
revolving credit agreement
Correct
1
25
This short-term funding specifies the maximum amount of money a company can borrow over a period of time,
generally a year. The bank will only lend the money if the funds are available. Generally, it requires monthly
interest payments and repayment of the principal within a year.
lines of credit
lines of credit
Correct
1
26
Extended by suppliers when a company receives goods or services and agrees to pay for them at a later date, this
type of funding is common in many industries such as retailing and manufacturing and has zero financing costs
when paid within the terms of the agreement.
trade credit
trade credit
Correct
1
27
This involves selling the company’s accounts receivable to either a bank or finance company at a discount. This
type of funding facilitates the quick conversion of accounts receivable into cash, without the need for collections.
factoring
factoring
Correct
1
28
This type of funding specifies the maximum amount of money a company can borrow, and funds are guaranteed
to be available when needed. Monthly interest payments plus an additional fee are generally required, along with
repayment of the principal within a year.
revolving credit agreement
revolving credit agreement
Correct
1
29
This type of funding is extended by commercial banks and finance companies as a significant source of short-term
financing for accounts receivable and inventory related to timing differences resulting from seasonal sales
fluctuations. It may require specific assets (accounts receivable and/or inventory) to be pledged as collateral.
short-term loans
short-term loans
Correct
1
30
This short-term IOU is sold by a company, typically in multiples of $100,000 to $1,000,000 with maturity dates
ranging from 1 to 270 days. With interest rates typically 1% to 2% lower than those of the banks, these loans are
usually restricted to large, financially secure corporations.
commercial paper
commercial paper
Correct
1
31
What is your assessment of the company’s short-term financing needs?
revolving credit agreement
commercial paper
Incorrect
0
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3.
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