Chapter 1: Intro to Financial Management

Nishaa has been promoted and is now in charge of all external financing. In other words, she is in charge of:

capital structure management

When conducting a financial analysis of a firm, financial analysts:

frequently use accounting information.

Corporate shareholders:

have the ability to change the corporation's bylaws.

secondary market

involves one owner or creditor selling to another

General Partnership

partnership in which partners share equally in both responsibility and liability

The issuer of a security must be involved in all _____________blank transactions involving that security.

primary market

Sole Proprietorship

a business owned and managed by a single individual

Partnership

a business owned by two or more people

Sarbanes-Oxley Act

requires the corporate officers to personally attest that the financial statements are a fair representation of the company's financial results.

primary market

the corporation is the seller, and the transaction raises money for the corporation.

Capital Structure

the mixture of debt and equity maintained by a firm

Agency Problem

the possibility of conflict of interest between the stockholders and management of a firm

Capital Budgeting

the process of planning and managing a firm's long-term investments

Raleigh BBQ has $48,000 in current assets and $39,000 in current liabilities. Decisions related to these accounts are referred to as:

working capital management

The daily financial operations of a firm are primarily controlled by managing the:

working capital.

Working Capital

A firm's short-term assets and liabilities.

What is the liability of a limited partner in a Limited Partnership?

A limited partner's liability for business debts is limited to the amount that partner contributes to the partnership.

NASDAQ

A nationwide electronic system that links dealers across the nation so that they can buy and sell securities electronically.

Maria is the sole proprietor of an antique store that is located in a rented warehouse. The store has an outstanding loan with the local bank but no other debt obligations. There are no specific assets pledged as security for the loan. Due to a sudden and unexpected downturn in the economy, the store is unable to generate sufficient funds to pay the loan payments due to the bank. Which of the following options does the bank have to collect the money it is owed? Sell the inventory and apply the proceeds to the debt Sell the lighting fixtures from the building and apply the proceeds to the debt Withdraw funds from Maria's personal account at the bank to pay the store's debt Sell any assets Maria personally owns and apply the proceeds to the store's debt

1, 3, and 4 only

Corporation

A business created as a distinct legal entity owned by one or more individuals or entities.

Which one of the following functions is generally a responsibility assigned to the corporate treasurer?

Capital expenditures

What is a Limited Partnership (LP)?

One or more general partners run the business with unlimited liability, while there are one or more limited partners who do not actively participate and have limited liability.

Stakeholders

Someone other than a stockholder or creditor who potentially has a claim on the cash flows of the firm.

Which one of the following correctly defines a common chain of command within a corporation?

The controller reports directly to the chief financial officer.

NYSE (New York Stock Exchange)

The largest stock market based on market capitalization and is floor based.

Jordan and Carmen created a firm that is a separate legal entity and will share ownership of that firm on a 75/25 basis. Which type of entity did they create if they have no personal liability for the firm's debts?

corporations

You contacted your stock broker this morning and placed an order to sell 300 shares of a stock that trades on the NYSE. This sale will occur in the:

secondary market.

Levi had an unexpected surprise when he returned home this morning. He found that a chemical spill from a local manufacturer had spilled over onto his property. The potential claim that he has against this manufacturer is that of a(n):

stakeholder