Question 1

You are comparing the financial statements of General Motors (an automaker) and Sears (a department store). Provide four items that you should consider if you are attempting to compare the future growth prospects of both firms.

Question 2

How would you respond to a business owner who says, "I see no need in putting together a financial plan for the future?All the numbers in the plan are just guesses anyway, no one knows what will happen for sure. I have a good idea what sales will be and beyond that, if sales are good, who needs a plan?"

Question 3

A firm has common and preferred stock outstanding, both of which just paid a dividend of $3 per share. Which do you think will have a higher share price and why? If the firm also has an issue of non-callable debentures outstanding, which do you think investors will require a higher return on, the debentures or the shares of common stock? Explain.