1. Patty is planning to expand her retail shop, and she needs to decide whether to borrow money or seek out investors. She spends time evaluating the pros and cons of taking out a loan from a bank versus selling an ownership stake in the business. Both options would constitute ___________ for the business.

a. risk return trade off

b financial capital

c financial leverage

d assent management

2. Muhamad is preparing to submit projections for his IT companys master budget. He is requesting a substantial increase in his operational budget to ensure the successful launch of a new security software product. Although there is no guarantee that this product will be profitable, Muhamad hopes that leadership understands the importance of putting forth their best effort on a product with a larger-than-average potential payoff. This way of thinking illustrates what is known as the _________ of a financial opportunity.

a financial capital

b asset management

c financial capital

d risk return trade off

3. Angela owns and operates an independent gas station. She continually evaluates how her business leverages debt versus equity to achieve the long-term plans she has set out for the business, like an eventual expansion of the grab-and-go food section and a bathroom remodel. This approach to evaluation illustrates how Angela manages her businesss

a risk

b net profit margin

c finances

d liquid assets

4. Dario works in finance at a healthcare start-up that has a higher-than-average tax burden. The chief financial officer (CFO) has asked Dario to make some recommendations on how the company can reduce taxes without sacrificing their access to financial resources.

Refer to Scenario 9.1. After reviewing the firms current capital structure, Dario recommends that they increase the amount of debt they have versus the amount of assets. Dario is advocating that they increase their _____________.

a net profit margin

b interest coverage

c financial leverage

d inventory turnover

5. Refer to Scenario 9.1. Dario points to some important key metrics that he used to arrive at his recommendation to increase the companys debt. One metric is the companys current _____________. If the company can increase this ratio, they can decrease their tax burden.

a net profit margin

b average collection period

c inventory turnover

d interesg coverage

6. In his recommendations, Dario was sure to call out how certain ratios will be affected by changes in the companys financial structure. He has highlighted how a decrease in the companys tax burden will also increase the companys __________, which could help assure investors that the company is doing a better job of maximizing its earnings.

a inventory turn over

b current ratio

c average collection period

d net profit margin

7.Jesse is the chief financial officer (CFO) for an office supply distribution company that recently lost one of its biggest customers to a new online-only distributor.

Refer to Scenario 9.2. Knowing that revenues will be significantly lower until the sales team can bring in new customers, Jesse takes a hard look at the companys ___________ to ensure that they can cover salaries, taxes, and fixed debt payments in the near-term.

a profitbility ratios

b current ratios

c liquidity ratios

d leverage ratios

8. Refer to Scenario 9.2. Another tool that Jesse can use to help the company understand how the loss of revenues will affect their bottom line is the _____________, which shows the relationship between the companys budgeted sales and net income. Jesse will show how the net income from the original projections will differ now that projected revenues are down.

a cash budget

b budgeted income statement

c master budget

d budgeted balance sheet

9. Zahra manages accounts receivable for a medical billing company. Many of their customers struggle to pay their bills on time, which often leaves the company strapped for cash. When the company needs to generate quick cash to pay short-term debts, they rely on ________. Zahra and her team have fewer receivables to manage when the company uses this kind of financing.

a lines of credit

b spontaneous financing

c factors

d trade edits

10. Aoife earned a Doctor of Pharmacy degree and then opened a small drug store where she fills prescriptions and also sells toiletries, over-the-counter medications, candy, and other sundries. As a new business, many of her suppliers require that she pay all invoices up-front. Aoife hopes that as her business credit rating improves, they will begin to offer her _________ so that she has a chance to earn revenues on items before she pays invoices.

a lines of credit

b spontaneous financing

c factors

d trade credits