Erick's Transition Erick Is Currently a Manager of a Small

question 56

Multiple Choice

Erick's Transition Erick is currently a manager of a small financial planning firm.He is seeking a new career with a large corporation in the banking industry.He recently applied for the financial manager opening at G & T Bank.He is concerned that the transition from his small firm to a large corporation will be difficult.To better prepare himself for this change,he has decided to enroll in a few business classes to strengthen his understanding of corporate finance.The business classes have proven to be a valuable tool for learning the critical skills needed to fully understand a financial plan,equity financing,and debt financing.Erick now believes he has strengthened his competitive advantage in his quest for the job.
-Refer to Erick's Transition.When Erick has to counsel clients on short-term versus long-term financing needs,which of the following should he identify as a short-term financing need?

• A) Speculative production
• B) Business start-up costs
• C) Acquisitions and mergers
• D) Replacement of equipment
• E) Expansion of facilities

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Definitions:

Issuing Stock

The process by which a company sells new shares to investors to raise capital.

Financing Activity

Transactions and events where cash is raised from or repaid to investors, influencing the equity and debt of a company.

Cash

Money in the form of currency that can be used immediately for transactions.

General Ledger

The master set of accounts that summarizes all transactions occurring within an entity, serving as the main accounting record.