FINC 3610 Sirmans Test 1 || with 100% Errorless Solutions.
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Course
FINC 3610 Sirmans
Institution
FINC 3610 Sirmans
Pros of Sole Proprietorship correct answers easy startup
taxed as personal income
Cons of Sole Proprietorship correct answers - Unlimited Liability
- Life limited to that of owner
- Equity limited to owner's wealth
- Difficulty in transferring ownership
Pros of General Partnership correct...
FINC 3610 Sirmans Test 1 || with 100% Errorless Solutions.
Pros of Sole Proprietorship correct answers easy startup
taxed as personal income
Cons of Sole Proprietorship correct answers - Unlimited Liability
- Life limited to that of owner
- Equity limited to owner's wealth
- Difficulty in transferring ownership
Pros of General Partnership correct answers easy start-up
partnership agreement
taxed as personal income
Cons of General Partnership correct answers unlimited liability
equity limited to owners life
difficult transfer
Difference between general and limited liability partnership correct answers in LLP, the limited
partner is only liable for the amount they invested; limited partner doesn't run the business
Pros of a Corporation correct answers Limited liability
Easy transfer of ownership
Unlimited life
Equity is not limited
Cons of a Corporation correct answers difficult startup
article of incorporation
double taxation of earnings
Chief Financial Officer (CFO) correct answers Corporate officer who is responsible for all of the
accounting and finance issues of the company
Treasurer correct answers oversees cash management, credit management, capital expenditures,
and financial planning
Controller correct answers oversees taxes, cost accounting, financial accounting and data
processing
Accountant's Role correct answers Accountants spend time on the collection and presentation of
financial data
Financial Manager's Role correct answers Financial managers analyze financial data and make
decisions based on their assessment of the associated risk and return
, 3 Major Questions of Corporate Finance correct answers What long-term investments should you
make?
How should you finance those investments?
How do you manage the daily operations of the firm such as collecting from customers and
paying suppliers?
Capital Budgeting correct answers the process of allocating the firm's capital to new projects and
investments
involves estimating the size, risk, and timing of the firm's cash flows
How is Capital Budgeting done? correct answers Estimate future cash flows
Estimate the cost of those cash flows
Discount the cash flows
Capital Structure correct answers mixture of debt and equity it uses to finance its investments
and operations
Short-term cash management correct answers Working capital refers to Short Term assets and
liabilities
Financial Markets Process (A-F) correct answers Firm issues securities
Firm invests in assets
Cash flow from firm's assets
Government (taxes) are paid
Cash flows are reinvested
Dividend and debt payments are made
Manager's objective correct answers Maximize shareholder value
3 decisions of maximizing shareholder value correct answers Investment Decision, Financing
Decision, Dividend Decision
Investment Decision correct answers invest in assets that earn a return greater than the minimum
acceptable hurdle rate
Financing Decision correct answers Find the right kind of debt for your firm and the right mix of
debt and equity to fund your operations
Dividend Decision correct answers If there are not enough investments that create value, return
the cash to the owners
Does shareholder value always override other considerations? correct answers No, need to avoid
illegal behavior as well as keep customers and employees happy for retention
When does an agency problem arise? correct answers when the interests and the motives of the
managers do not coincide with those of the owners
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