©THEBRIGHTSTARS 2024
BUSN 11 Chapter 9 Exam Questions With
Revised Answers
Finance - answer✔✔Functional area of business that is concerned with finding the best sources
and uses of financial capital. Goal of financial management is to maximize the value of the firm
to its owners.
Financial Capital - answer✔✔Funds that a firm uses to acquire assets and finance its operations
Shareholder Value and Social Responsibility - answer✔✔A socially responsible firm has an
obligation to respect the needs of all stakeholders. Being socially responsible requires a long-
term commitment to the needs of different stakeholders.
Fiduciary Duty of Financial Managers - answer✔✔Managers should make decisions that are
most consistent with the interests of ownership when conflicts arise
Risk - answer✔✔degree of uncertainty regarding the outcome of a decision
Risk-Return Tradeoff - answer✔✔observation that financial opportunities that offer high rates of
return are riskier than those offering lower rates of return
Financial Ratio Analysis - answer✔✔Computing ratios that compare values of key accounts
listed on financial statements.
Liquidity Ratios - answer✔✔measure the ability of a firm to obtain the cash it needs to pay its
short-term debt as they come due
Liquid Asset - answer✔✔can quickly be converted into cash with little risk of loss
Asset Management Ratios - answer✔✔measure how effectively a firm uses its assets to generate
revenue
Leverage Ratios - answer✔✔measure the extent to which a firm relies on debt financing in its
capital structure
Profitability Ratios - answer✔✔measure the rate of return a firm earns on various measures of
investment
Budgeted Income Statement - answer✔✔shows how a firm's budgeted sales and costs will affect
expected net income
BUSN 11 Chapter 9 Exam Questions With
Revised Answers
Finance - answer✔✔Functional area of business that is concerned with finding the best sources
and uses of financial capital. Goal of financial management is to maximize the value of the firm
to its owners.
Financial Capital - answer✔✔Funds that a firm uses to acquire assets and finance its operations
Shareholder Value and Social Responsibility - answer✔✔A socially responsible firm has an
obligation to respect the needs of all stakeholders. Being socially responsible requires a long-
term commitment to the needs of different stakeholders.
Fiduciary Duty of Financial Managers - answer✔✔Managers should make decisions that are
most consistent with the interests of ownership when conflicts arise
Risk - answer✔✔degree of uncertainty regarding the outcome of a decision
Risk-Return Tradeoff - answer✔✔observation that financial opportunities that offer high rates of
return are riskier than those offering lower rates of return
Financial Ratio Analysis - answer✔✔Computing ratios that compare values of key accounts
listed on financial statements.
Liquidity Ratios - answer✔✔measure the ability of a firm to obtain the cash it needs to pay its
short-term debt as they come due
Liquid Asset - answer✔✔can quickly be converted into cash with little risk of loss
Asset Management Ratios - answer✔✔measure how effectively a firm uses its assets to generate
revenue
Leverage Ratios - answer✔✔measure the extent to which a firm relies on debt financing in its
capital structure
Profitability Ratios - answer✔✔measure the rate of return a firm earns on various measures of
investment
Budgeted Income Statement - answer✔✔shows how a firm's budgeted sales and costs will affect
expected net income
