Chapter 1

1. If you were starting a new business what type of organization, ie. sole proprietorship, partnership, limited liability company or corporation, would you select? What would be the advantages and disadvantages of your selected organization? Would you plan to change the type of organization structure during the life of your business? Why or why not?

2. As you begin to plan for your new company, you decide that it will be important to hire a financial manager. Discuss the three areas of your company operations that you expect the financial manager to be responsible for.

Chapter 2

1. The income statement and the operating section of the cash flow statement present a companys results in very different formats. In your opinion, which statement is more important to shareholders? To company management? To creditors? Explain your responses.

2. As you become more familiar with the various financial statements used in managing the financial elements of your new company your new Financial Manager states that you also need to make use of various financial ratios in reviewing your companys operation. Select two financial ratios and discuss how they are calculated; on which financial statement would you find information to make the calculation and what information will each of the selected ratios provide about your companys