Risk capital investors provide equity  financing to small and untried enterprises, thereby absorbing much of the risk that commercial lenders are unwilling to shoulder.	True	False
The industry and economic environment in which a firm operates impose a certain level of business risk.
One of the C’s of credit is “coverage” and has to do with insurance
Institutions that provide funds, which include commercial banks, investment bankers, equipment vendors and government agencies, are considered forms of financing.
The first thing that a CFO has to do before approaching investors is to identify where the money will be coming from
Business risk has to do with the way a business is financed (debt versus shares).
Preferred share financing has some characteristics both of common share and debt financing.
Sale and leaseback is an arrangement made by someone to sell an asset to a lessee, than leases it back.
A line of credit and seasonal loan is required to finance the flexible component of the current asset accounts
Both, bonds and mortgages are used primarily to finance machinery and equipment.
Instrument risk has to do with the quality of security available to satisfy investors
There are several strategies for managing marketable securities one of which is the “ride-the-yield” approach
Investment securities are funds invested in bonds and shares so that they can be converted into cash quickly
A 6-time inventory turnover is better than 5 times
An indemnification policy is insurance a business takes against the catastrophic loss in inventories
By offering 2 | 10, N | 30 credit terms to customers, a company automatically improves its profitability.
Working capital accounts are more liquid than non-current asset accounts
Telephone repose time and percentage of defects are considered efficiency indicators
Preventive control is a system that helps managers monitor performance while work is being done
A strategic plan involves the process of developing detailed plans and budgets
A bank statement can be used as a screening control tool for controlling purposes
A typical business plan usually starts with the formulation of corporate strategies
Job descriptions can be used as a preventive control tool.
A capital budget reveals how much is required to invest in assets such as buildings, modernization and research and development
To make budgeting an effective management exercise, it is important for the controller to prepare budgeting guidelines and to communicate them to operating managers
Top-level managers should be actively involved in the budgeting process in order to avoid budgeting pitfalls
Budgeting involves setting standards that are central to managerial accountability
To calculate the cash break-even point, one should divide all fixed costs less depreciation by the PV ratio
Committed costs are considered variable costs and do NOT have to be incurred in order to operate a business
The break-even wedge method helps managers determine the most appropriate way to structure operating costs (fixed versus variable)
The break-even point can be calculated by dividing the total costs by the unit contribution margin.
Relevant range means costs (fixed and variable) that apply to a certain level of production
The cash break-even point shows the number of units or revenue that can be reached in order to cover total cash variable costs less depreciation
Sales commissions are considered a fixed cost

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Description Risk capital investors provide equity financing to small and untried enterprises thereby absorbing much of the risk that commercial lenders are unwilling to shoulder False The industry and ... View the full answer