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Exam (elaborations)

MGMT 310 Exam 1 questions well answered to pass

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  • Course
  • MGMT 310
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  • MGMT 310

MGMT 310 Exam 1 questions well answered to pass

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  • September 29, 2024
  • 8
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • MGMT 310
  • MGMT 310
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kirus27
MGMT 310 Exam 1

3 Roles of Financial managers - correct answer ✔✔1. capital budgeting

2. capital structure

3. working capital management



capital budgeting - correct answer ✔✔- the process of planning and managing a firm's long-term
investments

- financial manager tries to identify investment opportunities that are worth more to the firm than they
cost to acquire



capital structure - correct answer ✔✔- the mixture of debt and equity maintained by a firm

- financial manager has two concerns:

1. How much should the firm borrow? (what mixture of debt and equity is best)

2. What are the least expensive sources of funds for the firm?



working capital management - correct answer ✔✔- the managing of short-term assets and liabilities

- this is a day-to-day activity that ensures the firm has sufficient resources to continue its operations and
avoid costly interruptions



business structures - correct answer ✔✔1. sole proprietorship

2. partnership

3. corporation



sole propritorship - correct answer ✔✔- A business owned by one person

- owner keeps all profits

- owner has unlimited liability

- single taxation

- life of the sole proprietorship is limited to the owner's life span

, - amount of equity that can be raised is limited to the amount of the proprietor's wealth



partnership - correct answer ✔✔- two or more owners

- unlimited liability

- single taxation

- ownership is not easily transferrable

- limited life of business



corporation - correct answer ✔✔- a legal "person" separate and distinct from its owners, and has many
of the rights, duties, and privileges of an actual person

- starting a corporation is more difficult

- stockholders and managers are different groups

- limited liability

- double taxation (taxed at corporate level when they are earned and again at the personal level when
they are paid out)

- easier to raise funds



agency problem - correct answer ✔✔the possibility of conflict of interest between the stockholders and
management of a firm



balance sheet - correct answer ✔✔a "snapshot" of an organization's financial position at a given
moment



assets - correct answer ✔✔what a firm owns



liabilities - correct answer ✔✔what a firm owes



equity - correct answer ✔✔the difference between assets and liabilities



balance sheet identity - correct answer ✔✔Assets = Liabilities + Stockholders' Equity

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