Essay about Chapter 9 End Of Chapter Questions

2355 Words Nov 30th, 2014 10 Pages
Chapter Nine
Finance: Acquiring and Using Funds to Maximize Value
Review Questions
1. What is the key goal that guides the decisions of financial managers? What challenges do financial managers face when they try to find the best sources and uses of funds to meet this goal?

The financial mangers goal is acquisition, financing, and management of assets. The challenges are investment, financing, and asset management decisions.

2. List the four basic types of financial ratios used to measure a company’s performance, give an example of each type of ratio and explain its significance.

Liquidity, Solvency, Profitability, and Efficiency are the basic types of financial ratios. The liquidity ratio is the ratio of current assets to
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And a negative NPV means that the present value of the expected future cash flows from the project is less than the cost of the investment.

Application Questions
1. Your company has been struggling financially for quite some time now. You have a chance of making a profit this quarter, which is sure to bolster your stock’s sagging price. But it depends on your using a low cost waste disposal practice. The disposal practice is legal but you’ve also seen some studies indicating that it is likely to harm the environment. What would you decide to do and why?

2. Choose a company and obtain a copy of its most recent annual report. (In most cases, you can access annual reports simply by clicking on the link for investors, usually found on the company’s home page. You can also try the IRIN Annual Report Resource Center at www.irin.com, or Annual Reports.com at http://www.annualreports.com.) Using the financial statements, calculate three of the ratios described in this chapter. What conclusions can you draw from these ratios about the company’s financial strengths and weaknesses?

3. Your small company has $25,000 in surplus cash right now. You don’t want to commit these funds to any long-term investments because you know of some expenses coming up in about 8 months that

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