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232. When Liberty Industries renegotiated their loan agreement, they borrowed an additional
$2 million. The new loan requires Liberty to repay the new amount in nine months. Liberty's
activity represents ________ financing.
233. Finance managers spend the majority of their time managing ____.
234. Which of the following represents a source of short-term funding?
235. The most widely used source of short-term funding is:
236. ________ is a form of short-term financing. Businesses buy merchandise from their
suppliers, but are not required to pay for their purchases until some future date.
237. Some suppliers hesitate to offer trade credit to firms with a poor credit history. In these
cases, the supplier may insist that the customer sign a(n):
238. A loan backed by collateral represents a(n):
239. Typically, only highly regarded customers with financial stability receive __________.
240. Lending institutions may offer a borrower a percentage of the value of the borrower's
accounts receivable so the borrowing firm can continue to operate while it waits to collect on its
credit sales. This process is called _________.
241. A firm negotiates a(n) _________ with its bank. This arrangement gives the firm access to
a specified amount of unsecured short-term funds, provided the bank has the funds available.
242. A ________ refers to a line of credit that is guaranteed by the bank.
243. ___________ offer short-term secured loans to high-risk borrowers. These loans usually
require collateral.
244. Selling accounts receivable to obtain short-term funds is called:
245. Since commercial finance companies offer loans to higher-risk customers than
commercial banks, the interest rates they charge are usually ________ than rates charged by
banks.
246. _________ offers financially stable corporations a technique to raise short-term funds by
issuing unsecured promissory notes to the general public with the promise of repayment within
270 days.
247. Although best used as a last resort, many small businesses find it convenient to use
__________ as a short-term source of financing. Although this form short-term debt comes with
high interest rates, it provides a quick line of credit for many firms, including start-up companies
who may not be able to secure bank loans.
248. Many small businesses rely on factoring as a source of short-term financing because:
249. Which of the following organizations would be most likely to acquire short-term funding
by issuing commercial paper?
250. As a result of cash flow shortages, Millard's Department Stores has fallen behind in
payments to suppliers. Some suppliers are withholding shipments to Millard's until they receive
payments on overdue accounts. To meet their immediate needs, Millard's Department Stores
should utilize:
251. Maryland Nursery offers customers credit terms of 3/15, net 30. This gives customers a:
252. To secure financing for a planned expansion, Ohio Electronics borrowed $400,000 from
King Finance. The ________ loan agreement requires that Ohio Electronics provide the title to
their factory as collateral.
253. Farmers Savings and Loan agreed to extend Eckert's Orchards $200,000 of unsecured
short-term funds, contingent upon the bank having the funds available. This arrangement
represents a:
254. Energy-wise Builders, Inc., a leader in residential housing, recently negotiated a financing
arrangement with First Pennsylvania Bank. The short-term funding agreement guarantees a
specified amount of funds would be made available upon Energy-wise's request. This
arrangement represents a:
255. Virginia Supply offers their customers trade credit with terms 2/15, net 30. This implies
that:
256. The financial manager of Carolina Graphics negotiated a ________ with her bank that
allows Carolina to borrow up to $50,000 without collateral. This arrangement eliminates the need
to renegotiate the terms of the loan and complete new paperwork each time Carolina borrows
money. The preapproved short-term loan agreement is contingent upon the bank having the
funds available.
257. Vitale Jewelers obtains needed short-term funds by selling its accounts receivable to the
Friendly Finance Company. Friendly Finance usually pays Vitale about 80% of the value of the
receivables. Vitale Jewelers utilizes ________ as a means of raising short-term funds.
258. Long-term financing would normally be used to purchase:
259. Businesses match their long-term capital needs to:
260. Businesses acquire long-term financing from two major sources:
261. When using ________ financing, the company incurs a legal obligation to repay the
amount borrowed.
262. A promissory note that requires the borrower to repay the loan in specified installments is
called a(n):
263. A less-established company, or a company with a high debt to equity ratio, would be
considered a riskier investment to the lender. Which of the following principles attests to this
axiom?
264. A _________ represents a long-term debt obligation issued by a corporation or a
government.
265. The terms of the agreement in a bond issue are referred to as the:
266. Which of these is backed only by the reputation of the issuer?
267. Which of the following provides the buyer with collateral?
268. Through equity financing, stockholders become _________ of the firm.
269. __________ represent a favorable source of meeting long-term financing needs because
there are no interest payments, dividends, or underwriting fees required when using this source.
270. __________ provide financing to new or emerging companies with high profit potential. In
return, these organizations expect a share of ownership in the company.
271. __________ refers to the strategy of using borrowed funds to increase the rate of return
for stockholders.
272. The rate of return a company must earn to meet the demands of its lenders and
expectations of its equity holders is called:
