Finance Chapter 1 Quiz

An effective ethics program _______________

Can enhance a corporation's value

Which of the following is the best measure of profit maximization goal? (risk of the investment, retained earnings, earnings per share, timing of returns)

Earning per share

Financial decisions that are deemed to be consistent with firm strategy and considered? good? decisions should ___________ stock price

Increase

Which of the following is a strength of a corporation? (limited liability, less government regulation, low taxes, low organization costs)

Limited Liability

Profit maximization as the goal of the firm is not ideal because ________________

Profit maximization does not consider risk

Which of the following is a duty of financial manager in a business firm? (raising financial resources, auditing financial records, controlling the stock price, developing marketing plans)

Raising financial resources

When replacing equipment, what should be considered before the final decisions are made?

What will be the energy consumption of the new equipment. Whether even better robotics may be available in a short while. Whether there will be additional training necessary with the new equipment.

Corporate owners receive return ________________

By realizing gains through increases in share price and cash dividends

Financial managers evaluating decision alternatives or potential actions must consider _______

Risk, return, and the impact on share price

What is the primary goal of the financial manager?

Shareholder wealth maximization

When a financial manager makes good or bad financial decisions the impact of these decisions will be reflected in the company's ____________

Stock Price

Finance is _______________

The art and science of managing money

Which is more useful to a financial manager? (cash flow statement, income statement)

The cash flow statement because it recognizes amounts that will not be collected and, as a result, will not contribute to the wealth of the owners