Corporate finance is the art and the science of addressing what three issues? correct answers capital budgeting, capital structure, and working capital management
In the corporate finance organizational chart, what are the two main parts? correct answers Treasury and accounting
What are four ...
FINC 301 Final || with 100% Verified Solutions.
Corporate finance is the art and the science of addressing what three issues? correct answers
capital budgeting, capital structure, and working capital management
In the corporate finance organizational chart, what are the two main parts? correct answers
Treasury and accounting
What are four disadvantages of a sole proprietorship? correct answers unlimited liability, limited
lifespan equal to owner's, relatively difficult to raise capital, and ownership difficult to transfer
True or false: Sole proprietors and general partners both have unlimited personal liability correct
answers TRUE
What are four advantages of a corporation over other types of business organization? correct
answers limited liability for owners, unlimited lifespan of the corporation, ease of transferring
ownership, and ease of raising capital
True or false: A corporation is a legal person, established under state law correct answers TRUE
Of the 3 types of business organizations--proprietorship, partnership, corporation--which one has
double taxation? correct answers Corporation
What is the goal of financial management? correct answers To maximize the current value per
share of the existing stock of the corporation
What is "the agency problem" correct answers the agency problem arises when there are
conflicts of interest between principals and agents
Who are "stakeholders" correct answers stakeholders are non-stockholders who have an interest
in the success of the firm, including customers, employees, suppliers, local communities, and
governments at all levels
Why was the Sarbanes-Oxley Act of 2002 passed? correct answers It was passed to improve
corporate governance
True or false: compliance with Sarbox is very costly, and, ironically, has led some companies to
convert to private from public ownership correct answers TRUE
What are the three areas of focus in balance sheet analysis? correct answers Liquidity, Long-term
debt vs. Equity, and market value vs. book value
What are the three areas of focus in income statement analysis? correct answers GAAP, non-cash
items, time and costs
, True or false: due to various industry-specific deductions and allowances, and loopholes, average
tax rate varies widely by industry correct answers TRUE
What is the relevant tax rate for making financial decisions? correct answers The marginal tax
rate
What are "common-sized" financial statements? correct answers With common-sized financial
statements, the line items are expressed as percentages of a total--total assets or total sales
What is "earnings management"? correct answers It is the acceleration and/or deferral of income
from one period to the next, in order to smooth out earnings, and thus to smooth out the stock
price
What is "enterprise value"? correct answers A firm's enterprise value is equal to the market value
of its long-term debt plus the market value of its equity
What are 2 ways to evaluate financial ratios? correct answers Trends over time and comparison
to the industry
What are the cases that usually are run for long-term plans? correct answers Best case-optimistic
Normal case-most likely
Worst case-pessimistic
most financial models project asset items, liability items, and income statement items as
_________________ correct answers percentages of sales
Forecasted numbers are referred to as ___________ correct answers pro forma
What is the forecasting tool which consists of changing one variable to determine its impact on
the outcome of the forecast? correct answers Sensitivity analysis
The only thing that can be said with any certainty about any long-term financial forecasts is
that... correct answers it will be wrong
True or false: the key in financial forecasting is to be directionally correct correct answers TRUE
Financial projection models usually project required future external financing requirements as...
correct answers a "balancing" or "plug" item
In future financing needs, what is the fur-fold challenge for the financial manager? correct
answers Providing the right amount of financing, providing the right mix of debt and equity,
providing the right types of financial instruments, and preserving financial flexibility for future
financings
Thinking 2 financings ahead so that the immediate financings does not in any way limit
alternatives for subsequent financings is called... correct answers maintaining financial flexibility
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller FullyFocus. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.49. You're not tied to anything after your purchase.
