All of the Following Are Benefits Derived from Short-Term Financial

question 19

Multiple Choice

All of the following are benefits derived from short-term financial planning with the exception of:

• A) having advance notice of when your firm should require external financing.
• B) knowing for certain what your cash balance will be six months in advance.
• C) knowing if excess funds should be available for investing.
• D) being able to determine the approximate extent of time for which a loan is required.
• E) having the ability to time capital expenditures in order to place the least financial burden possible on a firm.

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Definitions:

Volume

Refers to the quantity of an item produced or sold over a specific period of time.

Calls

A financial instrument giving the holder the right, but not the obligation, to buy an asset at a specified price within a specific period.

Period Cost

Costs that are not directly associated with the production of goods and are expensed in the period they are incurred, such as administrative and selling expenses.

Variable Cost

Charges that adjust according to the volume of goods produced or sold, specifically materials and labor costs.