Principles of Finance: Chapters 1-5
processing cost reports
What responsibility should the controller have rather than the treasurer?
capital structure
A mixture of a firm's debt and equity financing is:
maximize the current value of the company's stock
What should be the goal of a corporation?
whether or not to purchase a new machine for the production line
An example of a capital budgeting decision is deciding:
Corporation
What type of company is limited liability?
how much debt should be assumed to fund a project
Capital structure include determining:
when each cash flow is expected to occur
When evaluating the timing of a project's projected cash flows, a financial manager is analyzing:
shareholders
Financial managers should primarily work in the interest of:
best represent the interest of the current shareholders.
Financial managers should strive to maximize the current value per share of the existing stock to:
1.) What long term investments should we take on? 2.) Where will we get the long-term financing to pay for the investment? 3.) How will we manage the everyday financial activities of the firm?
List 3 types of financial management decisions.
indirect agency costs
Management's tendency to forgo risky or expensive projects that could be justified from a risk-return standpoint
Current assets - current liabilities
Net Working Capital =
a capital structure decision
The decision to issue additional shares of stock is an example of:
capital budgeting
The management of a firm's long-term investments is:
direct agency costs
The purchase of something by management that can't be justified from a risk-return standpoint, and monitoring costs
an increase in the market value per share
What best illustrates that the management of a firm is adhering to the goal of financial management?
Working Capital Management
What category would this question be under: "How do we manage the day-to-day finances of the firm?"
Capital structure
What category would this question be under: "How should we pay for our assets? Should we use debt or equity?"
Capital budgeting
What category would this question be under: "What long-term investments or projects should the business take on?"
how much inventory should be on hand for immediate sale
What is one of a working capital management's decisions?
maximize the current value per share
What is the primary goal of a financial manager?
payments of dividends
What represents a cash outflow of a corporation?
employees and the government
Who are considered stakeholders of a firm?
vice president of finance
Who does the treasurer of a corporation generally report to?
Shareholders
Who has the ultimate control of a corporation?
Chief Financial Officer (CFO)
Who is the top financial manager at a firm?
Treasurer
Who oversees cash management, credit management, capital expenditures, and financial planning at a firm?
Controller
Who oversees taxes, cost accounting, financial accounting and data processing at a firm?
