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?

Is the planning process used to determine whether an organization's long term investments such as new machinery, replacement of machinery, new plants, new products, and research development projects are worth the funding of cash through the firm's capitalization structure.

3. What is the capital structure decision?

The capital structure is how a firm finances its overall operations and growth by using different sources of funds. Debt comes in the form of bond issues or long-term notes payable, while equity is classified as common stock, preferred stock or retained earnings. Short-term debt such as working capital requirements is also considered to be part of the capital structure.

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

Unlimited liability and limited life are two key advantages of the corporate form over other forms of business organizations. Double taxation and excessive tax fillings are two major disadvantages of selecting the corporate form.

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

Any income made by sole proprietors from the business is counted as personal income. Owners then pay taxes according to their individual tax rates. However the major disadvantages are sole proprietors must file any forms needed for the business name and operations .Sole proprietors are responsible for all monies and debt for a business, even under a separate marketing name.

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

Primary

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

Auction market

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

Treasurers and controllers are both financial managers, but they have different roles. Controllers usually concentrate on what has already happened inside a company. They prepare financial statements and other reports based on past activity. Treasurers focus outward and interact with the bankers, shareholders and potential investors who provide capital. In some small businesses, the owner, a controller and an outside accountant might share the financial duties.

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)?

The Wal-mart Corp

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?

Balance Sheet

2. How do you calculate net working capital?

Subtracting total current liabilities from total current assets.

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

Income Statement

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

Marginal tax rate

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

Cash Flow Statement

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

The Operating part of a cash flow statement analyzes a company's cash flow from net income or losses. For most companies, this section of the cash flow statement reconciles the net income to the actual cash the company received from or used in its operating activities. To do this, it deducts from net income any non-cash items and any cash that was used or provided by other operating assets and liabilities

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?

Balance Sheet

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

Income Statement

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

Balance Sheet

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

Cash Flow

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?

Profit margin, Total Asset turnover, Financial Leverage

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

Somewhere in between

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

High

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

High

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

High financial risk

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 peoples 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 peoples money. Walmart does which of the 3?