Question 1

What is the primary goal of a financial manager? When you see firms like Enron imploding from the behavior of executive management,how can you justify your definition?

Accepted Answer

The answer of What is the primary goal of a...

Question 2

Of the following activities,which is MOST likely to be an interaction between the financial manager and the manufacturing manager?
A)Setting of credit policies
B)Developing a system to bill customers,pay suppliers,and track inventory
C)Budgeting the timing and amount of cash needed for the production schedule
D)Determining that there are a sufficient number of trained workers to develop the product

Accepted Answer

Budgeting the timing and amount of cash needed for the production schedule involves coordination between the manufacturing and financial managers to ensure that production needs are met while minimizing cash flow issues. This requires collaboration between the two managers to make informed decisions about resource allocation and production schedules. The other activities listed could also involve collaboration between the financial and manufacturing managers, but budgeting cash flows is likely to require the most direct interaction.

Question 3

Of the following which group would be considered EXTERNAL PLAYERS of the firm?
A)The loan officer at the firm's commercial bank
B)The shop foreman
C)The human resources manager
D)The head of payroll and accounts payable

Accepted Answer

The loan officer at the firm's commercial bank is an external player as they are not part of the firm and have an outside role in providing financing to the firm. The shop foreman, human resources manager, and head of payroll and accounts payable are all internal players who are part of the firm's organizational structure.

Question 4

The author claims that the goals of keeping customers happy,employees happy,and shareholders happy are not mutually exclusive,even though the first two goals identified may be costly and come at the expense of shareholders.How can this be?

Accepted Answer

The answer of The author claims that the goals of...

Question 5

Which of the following can lead to increased expected cash flow over time to the firm?
A)Open and collaborative relations with the community
B)Qualified and motivated employees
C)Greater customer satisfaction
D)All of the above

Accepted Answer

Open and collaborative relations with the community can lead to increased customer satisfaction, which in turn can lead to increased sales and cash flow. Qualified and motivated employees can lead to increased productivity and efficiency, resulting in higher profits and cash flow. Greater customer satisfaction can lead to repeat business and positive word-of-mouth, which can also boost cash flow. Therefore, all of the above can contribute to increased expected cash flow over time to the firm.

Question 6

Stock prices reflect the expected size,risk,and timing of future cash flow of the company.

Accepted Answer

Stock prices are affected by various factors, including the performance and financial health of the company, market trends and conditions, and investor sentiment. However, the primary driver of stock prices is the expected size, risk, and timing of future cash flow of the company. Investors buy and sell stocks based on their assessment of the company's ability to generate revenue, earnings, and cash flow in the future. Therefore, stock prices reflect the market's expectation of the company's future prospects.

Question 7

Of the following activities,which is MOST likely to be an interaction between the financial manager and the information systems manager?
A)Developing a system to bill customers,pay suppliers,and track inventory
B)Costing of products
C)Setting credit policies
D)Determining the appropriate pricing of products

Accepted Answer

Developing a system to bill customers, pay suppliers, and track inventory requires collaboration between the financial manager and information systems manager to ensure the system meets the company's financial needs while also being efficient and accurate. The other activities listed may involve input from both managers, but the collaboration required is not as direct as in developing a financial management system.

Question 8

Maximizing the market value of firm equity and which of the following are mutually exclusive?
A)Maximizing market value and a safe and happy work place are mutually exclusive.
B)Maximizing market value and good relationships with the local community are mutually exclusive.
C)Maximizing market value and customer satisfaction are mutually exclusive.
D)None of the above is mutually exclusive with maximizing the value of market equity.

Accepted Answer

None of the choices are mutually exclusive with maximizing the market value of firm equity. In fact, factors such as a safe and happy workplace, good relationships with the local community, and customer satisfaction can all contribute to increasing the market value of a firm's equity. A firm that prioritizes these factors may be perceived more favorably by stakeholders, leading to higher market valuation.

Question 9

________ addresses the question of how to handle our day-to-day business needs.
A)Capital budgeting
B)Capital structure
C)Working capital management
D)Accounts receivable management

Accepted Answer

Working capital management addresses the management of a company's short-term assets and liabilities to ensure it has enough funds available to cover daily operations such as paying bills, making payroll, and purchasing inventory. Capital budgeting, on the other hand, focuses on long-term investment decisions, capital structure addresses how a company funds those investments, and accounts receivable management only deals with managing customer invoices and payments.

Question 10

Provide definitions for capital budgeting,capital structure,and working capital management.Give an example of a capital budgeting type decision and then do the same for capital structure and working capital management.

Accepted Answer

The answer of Provide definitions for capital budgeting,capital structure,and working...

Question 11

The primary objective of the finance manager is to maximize the market value of equity of the company.

Accepted Answer

Maximizing the market value of equity is one of the primary objectives of the finance manager as it represents the financial health and value of the company for shareholders. Other objectives may include maintaining financial stability, managing risk, and optimizing financial resources.

Question 12

A firm's stock price most closely reflects which of the following?
A)Current interest rates
B)Expected risk,magnitude,and timing of future cash flows of the firm
C)The amount and maturity of debt held by the firm
D)current federal tax codes

Accepted Answer

A firm's stock price is primarily based on the expected risk, magnitude, and timing of future cash flows of the firm. While current interest rates and the amount and maturity of debt held by the firm can affect the firm's financial performance, they do not have as direct of an impact on the stock price. Federal tax codes can have some impact on the firm's financial performance, but again, it is not as direct of an impact as the expected future cash flows.

Question 13

Working capital management is the day-to-day management of the operating needs of the company via current assets and current liabilities.

Accepted Answer

Working capital management involves managing a company's current assets and liabilities to ensure that it has sufficient cash flow to meet its operational needs on a day-to-day basis. Current assets include items such as cash, inventory, and accounts receivable, while current liabilities may include items such as accounts payable, short-term loans, and other debts that must be paid in the near term. Effective working capital management is critical to the success of any business, and involves careful monitoring of cash flow and other financial metrics to ensure that the company is able to meet its obligations and operate efficiently.

Question 14

How does maximizing the long-run expected cash flows to the firm translate into maximizing shareholders' wealth?

Accepted Answer

The answer of How does maximizing the long-run expected cash...

Question 15

Capital budgeting is the means by which a company is financed.

Accepted Answer

Capital budgeting is not the means by which a company is financed. It is the process of evaluating potential long-term investment opportunities or projects and deciding which projects to undertake. The financing for these projects may come from a variety of sources, including equity, debt, or retained earnings.

Question 16

Capital structure is the process of planning,evaluating,selecting,and managing the long-term operating projects of the company.

Accepted Answer

Capital structure refers to the mix of debt and equity financing a company uses to fund its operations and growth, not the process of managing long-term projects.

Question 17

Of the following activities,which is NOT likely to be an interaction between the financial manager and the marketing manager?
A)Costing of products
B)Setting credit policies
C)Determining that there are a sufficient number of trained workers to develop the product
D)Setting advertising budgets

Accepted Answer

While determining the number of trained workers required for product development may involve considerations such as labor costs and timelines, this is primarily an operational decision and not one that would typically require input from the financial manager. In contrast, costing of products, setting credit policies, and setting advertising budgets all have significant financial implications and would likely involve collaboration between the financial manager and marketing manager.

Question 18

When there are conflicts among managerial goals in U.S.markets,the most important priority is to ________.
A)increase the current market value of equity
B)keep all of the company's customers happy
C)foster good relationships with the community
D)maintain a safe and happy work place

Accepted Answer

Increasing the current market value of equity is usually seen as the primary goal of managers in the U.S. market, as it benefits shareholders and the company's financial well-being. While maintaining good relationships with customers, the community, and employees are also important, they may conflict with maximizing shareholder value in certain situations.

Question 19

According to the textbook,a good manager treats shareholders,customers,creditors,and employees equally.

Accepted Answer

The textbook states that a good manager must balance the interests of shareholders, customers, creditors, and employees, but it does not necessarily mean treating them equally. Depending on the situation, a manager may need to prioritize one group over the others. For example, during a financial crisis, a manager may need to focus on satisfying creditors to avoid bankruptcy before considering shareholder dividends or employee benefits.

Question 20

Of the following which group would be considered INTERNAL PLAYERS of the firm?
A)The finance manager
B)The shop foreman
C)The human resources manager
D)All of the above

Accepted Answer

Internal players are individuals within the organization who have a direct connection with the firm's operations and decision-making process. The finance manager, shop foreman, and human resources manager are all employees of the firm and therefore considered internal players.

Quiz 1: Financial Management

What is the primary goal of a financial manager? When you see firms like Enron imploding from the behavior of executive management,how can you justify your definition?

Of the following activities,which is MOST likely to be an interaction between the financial manager and the manufacturing manager?

Of the following which group would be considered EXTERNAL PLAYERS of the firm?

The author claims that the goals of keeping customers happy,employees happy,and shareholders happy are not mutually exclusive,even though the first two goals identified may be costly and come at the expense of shareholders.How can this be?

Which of the following can lead to increased expected cash flow over time to the firm?

Stock prices reflect the expected size,risk,and timing of future cash flow of the company.

Of the following activities,which is MOST likely to be an interaction between the financial manager and the information systems manager?

Maximizing the market value of firm equity and which of the following are mutually exclusive?

________ addresses the question of how to handle our day-to-day business needs.

Provide definitions for capital budgeting,capital structure,and working capital management.Give an example of a capital budgeting type decision and then do the same for capital structure and working capital management.

The primary objective of the finance manager is to maximize the market value of equity of the company.

A firm's stock price most closely reflects which of the following?

Working capital management is the day-to-day management of the operating needs of the company via current assets and current liabilities.

How does maximizing the long-run expected cash flows to the firm translate into maximizing shareholders' wealth?

Capital budgeting is the means by which a company is financed.

Capital structure is the process of planning,evaluating,selecting,and managing the long-term operating projects of the company.

Of the following activities,which is NOT likely to be an interaction between the financial manager and the marketing manager?

When there are conflicts among managerial goals in U.S.markets,the most important priority is to ________.

According to the textbook,a good manager treats shareholders,customers,creditors,and employees equally.

Of the following which group would be considered INTERNAL PLAYERS of the firm?