Principles of Finance: Chapters 1-5

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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?


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