1.Sole Proprietorships and Partnerships:

What are the primary disadvantages of the sole proprietorship and partnership forms of business organization? What benefits are there to these types of business organization as opposed to the corporate form?

2.Goal of Financial Management:

From the stockholders' point of view, what is a good financial management decision? What is the appropriate goal when the firm has no traded stock?

3.Financial Management Decisions:

What do capital budgeting, Capital Structure, and working capital management mean?

4.Agency Problems:

What is the main reason that an agency relationship exists in the corporate form of organization? In this context, what kinds of problems can arise?

5.DuPont Identity:

Why is the DuPont identity a valuable tool for analyzing the performance of a firm? Discuss the types of information it reveals.

QUESTIONS AND PROBLEMS (80 points)

1.Building a Balance Sheet:

Penguin Pucks, Inc., has current assets of $4,800, net fixed assets of $27,500, current liabilities of $4,200, and long-term debt of $10,500. What is the value of the shareholders' equity account for this firm? How much is net working capital?

2.Building an Income Statement:

Billy's Exterminators, Inc., has sales of $734,000, costs of $315,000, depreciation expense of $48,000, interest expense of $35,000, and a tax rate of 35 percent. What is the net income for this firm?