Financial Management

The basic objective of Financial Management is ________________

• Maximization of profit.

• Maximization of share holder's wealth

• Ensuring Financial discipline in the firm

• All of the choices

The market value of the firm is the result of__________.

• Dividend decisions

• Working capital decisions.

• Capital budgeting decisions

• Trade-off between risk and return.

The focal point of financial management in a firm is:

• the number and types of products or services provided by the firm.

• the minimization of the amount of taxes paid by the firm.

• the creation of value for shareholders.

• the dollars profits earned by the firm.

The decision function of financial management can be broken down into the _____ decisions.

• financing and investment

• financing and dividend

• capital budgeting, cash management, and credit management

• investment, financing, and asset management

The long-run objective of financial management is to:

• maximize earnings per share.

• maximize the value of the firm's common stock.

• maximize return on investment.

• maximize market share.

A(n)______ would be an example of a principal, while a(n) _____shareholder; manager would be an example of an agent.

• shareholder; manager

• manager; owner

• accountant; bondholder

• shareholder; bondholder

"Shareholder wealth" in a firm is represented by:

• the number of people employed in the firm.

• the book value of the firm's assets less the book value of its liabilities.

• the amount of salary paid to its employees.

• the market price per share of the firm's common stock.

The field of finance is closely related to the fields of:

• statistics and economics

• statistics and risk analysis

• economics and accounting

• accounting and comparative return analysis

Which of the following properly lists balance sheet items in order of liquidity, from most liquid to least liquid?

• Accounts receivable, inventory, marketable securities, cash.

• Cash, marketable securities, accounts receivable, inventory.

• Inventory, marketable securities, cash, accounts receivable.

• Cash, inventory, accounts receivable, marketable securities.

The balance sheet of the firm shows:

• the profitability of the firm over time

• the holdings and obligations of the firm

• the assets of the firm on a current cost basis

• the receipt and disbursement of corporate funds