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MGMT 310 Exam 1 questions well answered to pass
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MGMT 310 Exam 1 questions well answered to pass
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MGMT 310 Exam 13 Roles of Financial managers - correct answer ✔✔1. capital budgeting
2. capital structure
3. working capital management
capital budgeting - correct answer ✔✔- the process of planning and managing a firm's long-term
investments
- financial manager tries to identify investment opportunities that are worth more to the firm than they
cost to acquire
capital structure - correct answer ✔✔- the mixture of debt and equity maintained by a firm
- financial manager has two concerns:
1. How much should the firm borrow? (what mixture of debt and equity is best)
2. What are the least expensive sources of funds for the firm?
working capital management - correct answer ✔✔- the managing of short-term assets and liabilities
- this is a day-to-day activity that ensures the firm has sufficient resources to continue its operations and
avoid costly interruptions
business structures - correct answer ✔✔1. sole proprietorship
2. partnership
3. corporation
sole propritorship - correct answer ✔✔- A business owned by one person
- owner keeps all profits
- owner has unlimited liability
- single taxation
- life of the sole proprietorship is limited to the owner's life span
, - amount of equity that can be raised is limited to the amount of the proprietor's wealth
partnership - correct answer ✔✔- two or more owners
- unlimited liability
- single taxation
- ownership is not easily transferrable
- limited life of business
corporation - correct answer ✔✔- a legal "person" separate and distinct from its owners, and has many
of the rights, duties, and privileges of an actual person
- starting a corporation is more difficult
- stockholders and managers are different groups
- limited liability
- double taxation (taxed at corporate level when they are earned and again at the personal level when
they are paid out)
- easier to raise funds
agency problem - correct answer ✔✔the possibility of conflict of interest between the stockholders and
management of a firm
balance sheet - correct answer ✔✔a "snapshot" of an organization's financial position at a given
moment
assets - correct answer ✔✔what a firm owns
liabilities - correct answer ✔✔what a firm owes
equity - correct answer ✔✔the difference between assets and liabilities
balance sheet identity - correct answer ✔✔Assets = Liabilities + Stockholders' Equity
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