Question 1

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

The determining of sufficient workers is more of a responsibility of the operations manager, rather than the financial or marketing manager. The other activities listed generally involve both financial and marketing considerations, such as determining the cost of products and setting advertising budgets.

Question 2

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

Accepted Answer

The ultimate goal of a finance manager is to increase the value of the company, which in turn increases the market value of equity. Therefore, maximizing the market value of equity is the primary objective of the finance manager.

Question 3

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 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

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 the company's current assets (such as inventory, accounts receivable) and liabilities (such as accounts payable, short-term debts) to ensure sufficient liquidity to meet day-to-day operational needs.

Question 6

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

Accepted Answer

Capital budgeting is the process by which a company makes decisions about which long-term investments to pursue, based on factors such as the expected return on investment and the availability of funds. It is a financial management tool, but it is not the means by which a company is financed. Financing is the process by which a company obtains the funds it needs to pay for capital expenditures, including those identified through the capital budgeting process.

Question 7

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

Accepted Answer

A good manager should not treat all stakeholders equally. Rather, they should balance the interests of shareholders, customers, creditors, and employees in a way that maximizes long-term value for the company. This may involve prioritizing one stakeholder over another in certain situations.

Question 8

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 9

A firm's stock price most closely reflects which of the following?
A)Current interest rates
B)Expected future cash flows of the firm
C)The amount of debt held by the firm
D)None of the above

Accepted Answer

A firm's stock price is primarily determined by the expected future cash flows of the firm. This is because the stock represents ownership in the firm and investors are interested in the future profits and earnings of the company. Interest rates may impact the overall market but are not a direct factor in the specific stock price, and the amount of debt held by the firm may impact the company's financial health but does not have a direct correlation to the stock price.

Question 10

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 11

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 involves both financial management and information systems management. Financial management includes overseeing the financial operations of the company, while information systems management includes designing and implementing information systems that support those operations. Therefore, the financial manager and the information systems manager are likely to interact in order to develop an effective system for billing, payment, and inventory tracking. Costing of products, setting credit policies, and determining appropriate pricing of products are also important financial management activities, but they do not necessarily require significant input from information systems management.

Question 12

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

All of the options contribute to increased expected cash flow over time. Open and collaborative relations with the community helps build a positive reputation, which can attract more customers and business opportunities. Qualified and motivated employees are likely to be more productive and efficient, leading to higher quality products or services, and ultimately increased revenue. Greater customer satisfaction leads to repeat business, referrals, and positive word-of-mouth marketing, which can also drive up profits.

Question 13

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)All of the above

Accepted Answer

External players are individuals or entities who are outside the firm's management structure and have a direct impact on the firm's operations. The loan officer at the firm's commercial bank is an external player because they are involved in the firm's financial activities and provide external financing. The shop foreman and human resources manager are both internal players as they are part of the firm's management structure.

Question 14

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 15

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 of the firm refer to individuals who are part of the organization and are involved in decision-making processes. The finance manager, shop foreman, and human resources manager are all internal players as they play significant roles in managing the financial, operational, and human resource aspects of the firm. Therefore, the best answer is D, all of the above.

Question 16

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 options listed are mutually exclusive with maximizing the value of firm equity. In fact, creating a safe and happy work environment, maintaining positive relationships with the local community, and ensuring customer satisfaction can positively impact a firm's market value by improving its reputation and attracting more business.

Question 17

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 18

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 requires coordination between the financial manager and the manufacturing manager to ensure that enough cash is available for the production process. This involves discussions about the production schedule, resource allocation, and financing options. The other activities listed may involve the financial manager and manufacturing manager to some extent, but are not as likely to require direct interaction between the two.

Question 19

________ 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 involves managing a company's short-term assets and liabilities to ensure it has sufficient cash flow to meet its day-to-day business needs. It includes managing inventory, accounts payable, and accounts receivable. Capital budgeting deals with long-term investment decisions, capital structure is concerned with the mix of debt and equity used to finance a company, and accounts receivable management is a component of working capital management.

Question 20

Stock prices reflect the expected future cash flow of the company.

Accepted Answer

Stock prices are influenced by various factors, but ultimately they reflect the expectations of investors regarding the future cash flow of a company. If investors believe that a company's cash flow will increase in the future, they will be willing to pay a higher price for its stock, and vice versa. However, stock prices may not always fully reflect the true value of a company due to market inefficiencies and irrational investor behavior.

Quiz 1: Financial Management

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

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

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

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?

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

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

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

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.

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

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

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

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

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

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

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

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

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?

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

Stock prices reflect the expected future cash flow of the company.