Chapter 1-- Pick 7 of the 9 questions below : 1. Agency problems for corporation

Question

Chapter 1-- Pick 7 of the 9 questions below:

1. Agency problems for corporations were discussed in chapter 1. Between what two stakeholders do agency problems typically occur? (the answer is not the principal and the agent since these are not stakeholder classifications)

2. What is the capital budgeting decision?

3. What is the capital structure decision?

4. What is the major advantage of selecting the corporate form of organization and what is the major disadvantage?

5. What is the major advantage of selecting the sole proprietor form of organization what is the major disadvantage?

6. Several years ago, GoPro sold stock to the public for the first time. Was this a primary offering or a secondary offering?

7. Is the NYSE an auction market or a dealer market?

8. What is the difference between the job of the controller and the treasurer? (Identify the types of responsibilities each should have)

9. I call my broker and give her $68,000 to purchase 1000 shares of Wal-Mart stock, who receives this money from the broker? The Wal-Mart Corporation or some other shareholder (pick one)?

Chapter 2 -- Pick 9 of the 13 questions below:
1 Which financial statement tells the reader what the company owns, owes, and is left over?

2. How do you calculate net working capital?

3 Which financial statement tells the reader what the company earned and what it spent to earn this?

4 When computing the cash flows from a proposed new project, would you use the marginal tax rate or the average tax rate?

5 Which financial statement tells the reader where the cash went to and came from?

6 What does the operating section of the statement of cash flows tell the reader?

7 If inventories are $20,000 in 2011 and increase to $25,000 in 2012, would this be a source or use of cash for the business?

8 If accounts payable are $25,000 in 2011 and decrease to $20,000 in 2012, would this be a source or use of cash?

9 The historical cost of plant, property and equipment would appear on which financial statement?

10 Costs of goods sold would appear on which financial statement?

11 The repurchase of the company’s stock (in dollars for the period) would appear on which financial statement?

12 Which statement show the operating cycle, the investment cycle and the financing cycle?

13 When does a company get it working capital back?

Chapter 3 -- Pick 10 of the 14 questions below:
1. What three ratios make up DuPont Ratio Analysis?

2. What is better for the current ratio -- a high number, low number or somewhere in between? Circle one.

3. What is better for the profit margin ratio a high number, low number or somewhere in between? Circle one.

4. What is better for the asset turnover ratio a high number, low number or somewhere in between? Circle one.

5. Does a high equity multiplier indicate high financial risk or low financial risk? (pick one)

6. You are trying to compare the financial performance of your firm to that of similar firms. What are some of the key problems you might encounter in doing this comparison?

7. Between (shareholders, short term creditors, long term creditors, and management) what group would be most interested in liquidity ratios? Circle one.

8. Between (shareholders, short term creditors, long term creditors, and management) what group would be most interested in asset utilization ratios? Circle one.

9. Between (shareholders, short term creditors, long term creditors, and management) what group would be most interested in debt utilization ratios? Circle one.

10. Between (shareholders, short term creditors, long term creditors, and management) what group would be most interested in profitability ratios? Circle one.

11. Between (shareholders, short term creditors, long term creditors, and management) what group would be most interested in market ratios? Circle one.

12. After the initial public offering is over and the company is public, from what two sources do most corporations finance new projects or growth?

13. There are 3 ways to make money in business, sell a lot, make a lot on everything you sell, and use other people’s money. Apple Computer does which of the 3? Circle one.

14. There are 3 ways to make money in business, sell a lot, make a lot on everything you sell, and use other people’s money. Walmart does which of the 3?

Explanation / Answer

Chapter 3 -- Pick 10 of the 14 questions below:
1. What three ratios make up DuPont Ratio Analysis? Net profit marign, Asset turnover, Equity multiplier

2. What is better for the current ratio -- a high number, low number or somewhere in between? Circle one. High number

3. What is better for the profit margin ratio a high number, low number or somewhere in between? Circle one. High number

4. What is better for the asset turnover ratio a high number, low number or somewhere in between? Circle one. High number

5. Does a high equity multiplier indicate high financial risk or low financial risk? (pick one) High financial risk

7. Between (shareholders, short term creditors, long term creditors, and management) what group would be most interested in liquidity ratios? Circle one. short term creditors

8. Between (shareholders, short term creditors, long term creditors, and management) what group would be most interested in asset utilization ratios? Circle one. shareholders

10. Between (shareholders, short term creditors, long term creditors, and management) what group would be most interested in profitability ratios? Circle one. shareholders

13. There are 3 ways to make money in business, sell a lot, make a lot on everything you sell, and use other people’s money. Apple Computer does which of the 3? Circle one. make a lot on everything you sell

14. There are 3 ways to make money in business, sell a lot, make a lot on everything you sell, and use other people’s money. Walmart does which of the 3? sell a lot

P.S>: I am only allowed to answer 4 questions but have answered 10 questions

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