MBA6040 MANAGERIAL FINANCE EXAM PRACTICE QUESTIONS; Graded A+ latest exam prep questions with 100% correct and detailed solutions; (100% solved)
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MBA6040
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MBA6040
Book
Managerial Finance
This exam test is written to expose managers in practice, experts, professionals and students to the reality of applying the concepts of managerial finance
mba6040 managerial finance exam practice questions
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MBA6040 MANAGERIAL FINANCE
EXAM PRACTICE QUESTIONS
Forms of Business Organization - Sole Proprietorship
Partnership
Corporation
Partnership - When you need more capital it becomes corporation
Corporation - You have more opportunities to raise more money and capital
limited liability for owners
-this is great when raising money
ongoing life; even when someone dies the status of the company still lives on and
doesn't falter
the ability to transfer ownership is much easier/possible
What is the difference between primary and secondary? - Primary
-Corporation receives money and is part of the transaction
Secondary
-Customer goes through a transaction that doesn't include the corporation
What is financial management? - The acquisitions, management, and financing of
resources by firms
Land, cash, equipment, (etc.) things that are needed to run the business will also be
included as resources
Resources
What are the three main areas of Corporate Finance? - Capital Budgeting
Capital Structure
Working Capital Management
, Capital Budgeting - The process of planning and managing long-term investment
Size, timing, and risk of cash flows are important when it comes decision making
Capital Structure - The mixture of debt and equity maintained by a firm
How should we (the company) pay
-Should we use debt or equity
Leverage- Debt to equity; how much debt is related to equity
Working Capital Management - Management of short-term assets and current liabilities
We do not want too many current assets, otherwise you won't add any value and make
any money
What is the goal of Financial Management - It is to maximize shareholder wealth
What are the three categories of the Financial Manager? - The Chief Financial Officer
The Treasurer
The Controller
Chief Financial Officer - Responsible for the financial management of the firm
The Treasurer - Cash and credit management, capital budgeting, raising capital,
financial planning
What is the goal of the Financial Manager? - To maximize shareholder wealth
-should be at least
Sometimes the goals can be corrupted by personal interest
-jets, houses, cars
-get more money
What is The Agency Problem? - The possibility of conflict of interest between the
stockholders/shareholders and management
Controlling The Agency Problem: How to control the problem between shareholders and
management - Alignment of interest
-Give stock options
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