Short-Term Business Financing 31. Which of the following is NOT a characteristic

Question

Short-Term Business Financing

31. Which of the following is NOT a characteristic of a current asset?

a. cash

b. marketable securities

c. accounts payable

d. accounts receivable

32. The balanced approach is also referred to as the ___ ___ ___.

a. maturity matching approach

b. immature matching approach

c. permanent matching approach

d. primary matching approach

33. What is a line of credit?

a. a loan limit established by the consumer to payback a loan

b. a loan limit established by a bank for each business customer

c. a loan limit established by a bank for each student loan

d. a loan limit established by a bank for each consumer

34. Who established the Small Business Administration (SBA)?

a. the federal government

b. OSHA

c. it is a private owned entity

d. it is owned by a foreign firm

35. What is commercial paper?

a. a long-term promissory note

b. a short-term promissory note

c. a long-term secured loan

d. a short-term secured loan

Chapter 17: Capital Budget Analysis

36. Which of the following is true about an independent project?

a. it is not in direct competition with another project

b. they are in direct competition with one another

c. they are not evaluated based on shareholder wealth

d. they are never evaluated

37. What is a SWOT analysis?

a. a review of the stock strategies

b. a review of the firm

Explanation / Answer

31)

Accounts Payable (which is Option C)

______________

Details Provided Below

Current assets are those which are readily convertible into cash. It includes assets like accounts receivables, cash, inventory etc. Current Liabilities include accounts payable, accrual etc.

__________

32)

Maturity Matching Approach (which is Option A)

______________

Details Provided Below

Under maturity matching approach, short term business requirements are met with short term debts and long term business requirements are met with with long term debts. Thus, a balanced approach is followed to meet the financing requirements.

__________

33)

A loan limit established by a bank for each business customer (which is Option B)

______________

Details Provided Below

A bank establishes a limit of loan that can be extended to each and every borrower/customer. This limit is the maximum amount that can be borrowed by a customer. In financial terms, this limit is known as line of credit.

__________

34)

The Federal Government (which is Option A)

______________

Details Provided Below

SBA was created in the Year 1953. It is an indpenedent agency of the federal government that works to provide loans, offer assistance and protect the interest of small business owners.

__________

35)

A short-term promissory note (which is Option B)

______________

Details Provided Below

A commerical paper is a form of unsecured loan granted throuhaving a maturity of a maxmium period 270 days from the date of issuance. Since, the period is less than 270 days, it will be treated as a short term instrument.

__________

36)

It is not in direct competition with another project (which is Option A)

______________

Details Provided Below

Mutually exclusive project are in direct competition with each other. Independent project is not in direct competition with any other project.

__________

37)

A review of the firm

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