Which of the following statements is TRUE?a. The primary goal of financial management is to maximize thefirm's profit and creditors' wealthOb. The capital budgeting decision deals with how the firmobtains financing to support short-term investments.c. The observed market price of a company's stock is thestock's "true" value based on accurate risk and return data.Od. Shareholders elect the board of directors, who in turn createa management team to run the company and achievecorporate goals.e. Security analysis and portfolio theory are in the area ofcorporate finance.

Financial Management deals with the maximization of shareholder worth, reduce the cost of finance…

Which of the following statements is TRUE? a. The primary goal of financial management is to maximize the firm's profit and creditors' wealth Ob. The capital budgeting decision deals with how the firm obtains financing to support short-term investments. c. The observed market price of a company's stock is the

Which of the following statements is TRUE? a. The primary goal of financial management is to maximize the firm's profit and creditors' wealth Ob. The capital budgeting decision deals with how the firm obtains financing to support short-term investments. c. The observed market price of a company's stock is the

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 85PSA

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Select all that is true about the role of financial managers and the types of financial decisions they make. Select one or more: a. Capital structure describes the mix of short-term liabilities a firm uses to finance its short-term assets. b. The optimal financial management strategy of a financial manager is to reduce the overall risk level of the firm. c. The duties of the financial manager includes determining the capital structure and which projects the firm should undertake. Od. Size and timing of cash flows is unimportant in a capital budgeting decision. e. Capital Budgeting function involves planning and determining the firm's short term investments. Of. Determining the appropriate level of inventory is a working capital management function. ZA do W X L
Select all that is true about the role of financial managers and the types of financial decisions they make. a. The optimal financial management strategy of a financial manager is to reduce the overall risk level of the firm.b. The duties of the financial manager includes determining the capital structure and which projects the firm should undertake.c. Capital structure describes the mix of short-term liabilities a firm uses to finance its short-term assets.d. Capital Budgeting function involves planning and determining the firm’s short term investments.e. Determining the appropriate level of inventory is a working capital management function.f. Size and timing of cash flows is unimportant in a capital budgeting decision.
If you were a finance leader in a business organization, how would you apply the concept of risk and return in your daily decision-making processes? How might you explain the concept of risk vs. return trade-off during a shareholders' meeting? How would a proposed initiative to diversify current holdings factor into the discussion about total risk for the organization? Explain
We can imagine the financial manager doing several things on behalf of the firm's stockholders. For example, the manager might: Make shareholders as wealthy as possible by investing in real assets. Modify the firm's investment plan to help shareholders achieve a particular time pattern of consumption. Choose high- or low-risk assets to match shareholders' risk preferences. Help balance shareholders' checkbooks. But in well-functioning capital markets, shareholders will vote for only one of these goals. Which one? Why?
Select all that is true about the role of financial managers and the types of financial decisions they make. a. Capital Budgeting function involves planning and determining the firm’s short term investments. b. Determining the appropriate level of inventory is a working capital management function. c. The duties of the financial manager includes determining the capital structure and which projects the firm should undertake. d. Capital structure describes the mix of short-term liabilities a firm uses to finance its short-term assets. e. The optimal financial management strategy of a financial manager is to reduce the overall risk level of the firm. f. Size and timing of cash flows is unimportant in a capital budgeting decision.
Direction: Answer comprehensively the following questions. 1. Explain the shareholder wealth maximization goal of the firm and how it can be measured. Make an argument for why it is better goal than maximizing profit. 2. What conflicts of interest can arise between managers and stockholders? 3. Name and describe as many stockholders as you can. 4. State the kinds of assurances that investors and creditors seek from a firm. 5. What are the three types of financial management decisions? For each type of decision, give an example of a business transaction that would be relevant.
The objectives of financial reporting include which of the following? a. Financial reporting should provide information ·a. that is comprehensibie to all potential investors. b. Financial reporting should provide information directly to potential investors about the nature, timing, and uncertainty of prospective cash dividends. c. Financial reporting should provide information that is useful to potential investors in making rational investment decisions. d. Financial reporting shouid provide information about an enterprise's economic resources bưt not about circumstances that change those resources.
We can imagine the financial manager doing several things on behalf of the firm's stockholders. But in well-functioning capital markets, shareholders will vote for only one of these goals. Which one? Multiple Choice Modify the firm's investment plan to help shareholders achieve a particular time pattern of consumption. Help balance shareholders' checkbooks. Choose high- or low-risk assets to match shareholders' risk preferences. Make shareholders as wealthy as possible by investing in real assets.
which one is correct answer? Q30: ____ determines the ultimate distribution of the firm’s earnings between reinvestment and cash dividend payment to shareholders. a. Financial expertise b. Board of Directors’ agreements c. Dividend policy d. Management efficiency
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What is the blend of long-term financial sources used to finance the firm which may include debt, equity ?and preferred stock اخترأحد الخیارات a. Working Capital O b. Profit Maximization c. None of the option d. Risk and Return e. Capital Budgeting O
explain these two briefly 1. MANAGEMENT RISK - Decisions made by a firm's management and board of directors materially affect the risk faced by investors. Areas affected by these decisions range from product innovation and production methods (business risk) and financing (financial risk) to acquisitions. 2. FINANCIAL RISK - The firm's capital structure or sources of financing determine financial risk. If the firm is all-equity financed, any variability in operating income is passed directly to net income on an equal percentage basis.