Question- In a large corporation, the financial manager is primarily responsible for:
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Question- In large firms, financial activity is usually associated with which top officer?
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Question- Which corporate officer is responsible for accurate financial reporting of the firm’sactivities?
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Question- A treasurer’s responsibilities typically include:
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Question- Capital budgeting is concerned with planning and managing a firm’s_____.
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Question- Which term applies to the mixture of debt and equity maintained by a firm?
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Question- Which of the following is included in working capital?
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Question- A corporation receives cash from financial markets by selling ____ and _____.
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Question- In financial markets, debt and ______ securities are bought and sold.
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Cash Manager, Credit Manager, Capital Expenditures, Financial Planning
Tax Manager, Cost Accounting Manager, Financial Accounting Manager, Information Technology Manager
Which planning function is usually part of the treasurer's responsibility in a corporation?
Typically falls under the controller
The decision to begin development of a new product
Questions related to long-term investments of the firm such as developing a new product are typically part of the capital budgeting process
Deciding whether or not to extend credit to a new customer
Is NOT considered a capital structure decision. Capital structure decisions are part of the financial planning function and include how much the firm should borrow and which sources of funding should be used.
Deciding whether or not to extend credit to a new customer
Is NOT considered part of the financial planning process in a firm
Whether or not to issue credit to a new customer
Does not fall under capital budgeting function. Credit decisions are part of working capital management as they do not relate to long term financing
Sole Proprietorship or Partnership
Simple and inexpensive to establish, Least regulated, Unlimited liability for owners, Limited life, Difficult to transfer ownership, Typically a small number of owners
Complex and costly to establish, Limited liability for owners, Highly regulated, Double taxation of profits, Unlimited life, Ease of ownership transfer, A legal resident of a state.
A disadvantage of a sole proprietorship
Ease of ownership transfer
A advantage of a sole proprietorship
Double taxation of profits
A disadvantage of a corporation
Relatively easy to establish
An advantage of a corporation
Exists as a separate entity from the owners
A disadvantage of a partnership
Ease of ownership transfer
An advantage of a partnership
Complicated and costly to establish
Which of the following actions by financial manger is most apt to create an agency problem?
Increasing current profits when doing so lowers the value of the firm's equity
A firm which opts to "go dark" in response to the Sarbanes-Oxley Act
Can provide less information to its shareholders than it did prior to "going dark"
Sally and Alicia currently are general partners in a business located in Atlanta, GA. They are content with their current tax situation but are both very uncomfortable with the unlimited liability to which they are each subjected. Which form of business equity should they consider to replace their general partnership assuming they wish to remain the only two owners of their business? Whichever organization they select, they wish to be treated equally.
Limited Liability Company, LLC
Why should financial managers strive to maximize the current value per share of the existing stock?
Because they have been hired to represent the interests of the current shareholders
Both sole proprietorship and partnership income is taxed as individual income
Which of the following are results related to the enactment of the Sarbanes - Oxley Act of 2007?
I. Increased foreign stock exchange listings of US stocks
II. Decreased compliance costs
III. Increased privatization of public corporations
IV. Increased public
disclosure by all corporations
I and III only, Increase foreign stock exact angle listings of US stocks, and Increase privatization of public corporations
Decisions made by financial managers should primarily focus on increasing
Market value per share of outstanding stock
The articles of incorporation:
I. Describe the purpose of the firm
II. Are amended periodically
III. Set forth the number of shares of stock that can be issued
IV. Detail the method that will be used to elect corporate directors
I and III only, describe the purpose of the firm, and set forth the number of shares of stock that can be issued.
Some large companies are listed on NASDAQ
This is generally correct
Auction markets match buy and sell orders
Sam, Alfredo, and Juan want to start a small US business. Juan will fund the venture but want to limit his liability to his initial investment and no interest in the daily operations. Sam will continue to contribute his full efforts on a daily basis but has limited funds to invest in the business. Alfredo will be involved as an active consultant and manager and will also contribute funds. Sam and Alfredo are willing to accept liability for the firm's debts as they feel they have nothing to lose by doing so. All three individuals will share in the firm's profits a Dana wish to keep the initial organizational costs of the business to a minimum. Which form of business entity should these individuals adopt?
This is least likely to be an agency problem
Increasing the market value of the firm's shares
This characteristic applies to a limited liability company
Taxed similar to a partnership
Cop orations can raise large amounts of capital generally easier than partnerships can
The listing requirements for the NYSE are more stringent than those of NASDAQ
Shareholder A sold share of Maplewood Cabinets stock to Shareholder B. The stock is listed on the NYSE. This trade occurred in?
Secondary, auction market
Some of the cash flow generated by a firm goes back to the financial markets in the form of
Dividends and debt payments
A good financial decision will
Increase the value of the firm's existing stock, and increase market value of the shareholders' equity
The controller is responsible for
Tax reporting, and financial accounting
The owners of a corporation are called
________Budgeting is the process of making and managing expenditures on long-term assets
True of sole proprietorship
It is one of the simplest types of businesses to form, a proprietorship has a limited life
A business without separate legal authority formed by two or more people is known as
Which corporate office is responsible for accurate financial accounting of the firm's activities?
The most important questions to be asked when a business is started
How will everyday financial activities be handled, What long-term investments should be made, and Where will long-term financing be obtained to pay for investments
Net working capital is defined as current assets minus current
A corporation receives cash from financial markets by selling
When one owner or creditor sells to another, the transaction takes place in the _______________market
The Sarbanes-Oxley Act requires corporate officers to
Confirm the validity of the annual financial report, List any deficiencies in internal controls, and Accept responsibility for material errors in the annual report
If you hire a real estate company to sell your house, you are most apt to encounter
Possible financial goals of a company?
Survival, Minimize costs, Maximize profits
In a shareholder-manger relationship, who is the agent?
This can be used to encourage managers to act in the best interests of the shareholders
Stock options and bonuses, The threat of termination, Managerial compensation tied to performance
How is ownership transferred in a corporation?
Ownership is transferred by gifting or selling share of stock
These are important when considering a partnership.
Personal liability for firm debts, Fund raising limitations, Taxation of partnership income.
Businesses are motivated to organize as corporations because stockholders in a corporation have __________liability for corporate debt
Generally report to the chief financial officer (CFO)
General partnership has these characteristics.
Each owner has unlimited liability for all firm debts, it is difficult to transfer ownership
The party that is the last to receive payment if a firm were to close
Main goal of financial management?
To maximize shareholder wealth
Two basic classifications under which most potential financial goals fall
Controlling risk, and Earning or increasing profits
The cost incurred due to conflict of interest between stockholders and management are called
The rules used by a corporation to regulate its existence are known as
Why a corporation is the most important form of business
Corporations can enter into contracts, a corporation is a separate legal entity with the ability to acquire and exchange property, Corporations can sue and be sued.
A __________is someone other than an owner or a creditor who potentially has claim of the cash flows of a firm
In a limited partnership, a limited partner's liability for business debts is
Limited to their cash contribution to the partnership
The Federal Government taxes
Corporate earnings, and Shareholder dividends
A good financial decision will
Increase the value of the firm's existing stock, increase the market value of the shareholders' equity
The controller is responsible for
Financial accounting, and tax reporting and payments
A limited liabilities company's owners have
An organization must prepare _______ and bylaws when forming a corporation
Articles of incorporation
Included in a firm's capital structure
Equity and Long-term debt
Non-owner stakeholders in a company
Employees, government, and suppliers
When one owner or creditor sells to another, the transaction takes place in the _________ market
A bad financial decision is defined as a decision that __________owner's equity
When a corporation is formed, it is granted
The ability to issue stock, Legal powers to sue, State citizenship for jurisdictional purposes
A Sole Proprietorship is a business owned by ______ person(s)
Applies to the mixture of debt and equity maintained by a firm
Shareholders are the ONLY stakeholders in a firm as they are the owners
The life of a corporation
A corporation is a distinct ____________ entity and as such can have a name and take advantage of the legal powers of natural persons
A treasurer's responsibilities typically include
Making financial plans, handling cash flows, managing capital expenditures
Because shareholders get paid last after all other obligations are satisfied, they are often called:
These companies were involved in corporate scandals that led to Sarbanes-Oxley
Corporations in other countries are often called:
Public limited companies, Limited liability company, or joint stock companies
The officer responsible for managing the firm's cash flows is the
The Sarbanes-Oxley Act provides incentives for companies to go public in US markets
A shareholders liability is limited to
The amount the shareholder invested in the corporation
Primary purpose of awarding stock options to managers
To give managers the incentive to pursue shareholders' goals, such as, increasing shareholder value
An important mechanism used by unhappy stockholders to replace current managment
Since ownership in a corporation can be dispersed over a huge number of stockholders, it can be argued that _______ effectively controls the firm