Question 1

Define the two primary sources of equity financing.

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Question 2

Define capital budgeting, and explain how it is used to evaluate business proposals.

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Question 3

What is spontaneous financing? What is the most common source of this type of financing? If you see 2/10 net 30 on a shipment invoice, what does it tell the buyer about the payment terms?

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Question 4

What is a pro forma statement? Describe the two major types of pro forma statements, and explain the role they play in financial planning.

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Question 5

What role does a factor play in providing short-term financing to a firm? Why would firms that rely heavily on credit sales find factoring attractive?

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Question 6

Discuss how financial managers use cash budgets.

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Question 7

List and explain the benefits of two forms of short-term financing: trade credit and factoring.

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Question 8

Define accounts receivable. What are the advantages and disadvantages of having a large accounts receivable? Describe the policy corporations create to manage their accounts receivable accounts.

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Question 9

What is net working capital? Describe the key components of net working capital.

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Question 10

Identify the key issues managers must consider when determining a firm's capital structure.

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Question 11

Define NPV, and describe how it is used to evaluate capital budgeting proposals.

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Question 12

How are lines of credit and revolving credit arrangements similar? How are they different?

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Question 13

Financial managers typically seek more permanent funding to finance major investments and provide a secure financial base for their company. Discuss two forms of long-term financing available to firms.

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Question 14

Managing current assets involves tradeoffs. Give two examples of current assets, and specify the tradeoffs involved a manager needs to consider when managing those assets.

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Quiz 8: Finance: Acquiring and Using Funds to Maximize Value