Answer the questions in your own words.

1. What advantages do sole proprietorships and partnerships offer? What is a major drawback of these types of organization? (10 points)

2. In a corporate governance, what group has the ultimate responsibility for monitoring management and protecting the stockholders' interests? Who elects this group? (10 points)

3. What is meant by maximizing owners equity value (shareholder wealth)? Why are maximizing just net income, or just profit, inappropriate goals? (10 points)

4. List and describe the four major financial statements. (20 points)

5. Why do financial managers and investors find cash flows to be more important than accounting profit? (10 points)

6. What information does time series analysis provide for firm managers, analysts, and investors? (10 points)

7. Define the following ratios and explain their significance. (30 points)
   1. Quick ratio
   2. Average collection period
   3. Return on equity
   4. Debt ratio
   5. Profit margin