Sophia
Principles of Finance
Milestone 4
1
Which of the following is an example of an operational risk for a company that manufactures
automobiles?
Rising interest rates that affect the terms of car loans, thereby decreasing demand
Damage to completed cars held on a storage lot
A state tax increase that makes buying and registering a car more expensive
A national car rental agency backing out of a contract to buy a certain volume of new cars
CONCEPT
Risk and Capital Budgeting
2
Which of the following is a goal of working capital management?
To ensure liquidity and increase cash holding costs
,To balance adequate cash flow against maximal returns
To lengthen the span of time between payment of accounts payable and collection of accounts
receivable
To minimize free working capital and maximize opportunity costs
CONCEPT
Working Capital Financing
3
Seed money is a type of financing appropriate for a company in what stage of development?
Growth
Introduction
Maturity
Decline
CONCEPT
Types of Financing
, 4
Kiran needs additional short-term financing for his robotics company, so he asks his suppliers if
they could issue a discount if he pays his bills early.
What type of financing resource is Kiran using?
Trade credit
Barter
Peer-to-peer lending
Factoring
CONCEPT
Short-Term Financing
5
What can a business that has too little working capital do to increase it?
Decrease inventory
Increase short-term liabilities
Principles of Finance
Milestone 4
1
Which of the following is an example of an operational risk for a company that manufactures
automobiles?
Rising interest rates that affect the terms of car loans, thereby decreasing demand
Damage to completed cars held on a storage lot
A state tax increase that makes buying and registering a car more expensive
A national car rental agency backing out of a contract to buy a certain volume of new cars
CONCEPT
Risk and Capital Budgeting
2
Which of the following is a goal of working capital management?
To ensure liquidity and increase cash holding costs
,To balance adequate cash flow against maximal returns
To lengthen the span of time between payment of accounts payable and collection of accounts
receivable
To minimize free working capital and maximize opportunity costs
CONCEPT
Working Capital Financing
3
Seed money is a type of financing appropriate for a company in what stage of development?
Growth
Introduction
Maturity
Decline
CONCEPT
Types of Financing
, 4
Kiran needs additional short-term financing for his robotics company, so he asks his suppliers if
they could issue a discount if he pays his bills early.
What type of financing resource is Kiran using?
Trade credit
Barter
Peer-to-peer lending
Factoring
CONCEPT
Short-Term Financing
5
What can a business that has too little working capital do to increase it?
Decrease inventory
Increase short-term liabilities
