Directions:
Include a copy of the question with each of your answers. For the problem-solving questions, show your
work, to receive partial credit. If you
use one or more sources of information in preparing any answer, provide an
APA-style reference, identify any quoted information, and cite a reference
wherever it is used. Each question is
equally-weighted, and is worth 20 points, for a total of 180 points. The exam is 18% of your course grade. Use the
Submit Assignment button to submit
your exam answers to the Grade Center by the end of module eight.
1.
How
would each of the following events change the equilibrium financial market
value of a company? (a)an increase in its cost of production; (b) an increase
in its cost of financing; (c) an increase in the market’s discount rate; (d) an
increase in its sales revenue; and (e) an increase in its projected future
profits.
2.
Describe
one way that a financial manager of a retail company would efficiently adjust
his company’s financial management practices to each of the following changes
in market conditions: (a) a big competitor enters the market; (b) technological
progress makes it easier to sell online; (c) it’s the beginning of the
Christmas season; (d) the economy just entered a recession; (e) a nationwide
banking crisis just started, reducing the availability of credit.
3.
(a)
Define the current ratio and return on assets ratio. (b) State what financial
management problem each of these financial ratios could be used to identify.
(c) What would be a good benchmark to use for each of these financial ratios?
4.
(a)
Provide two reasons for a company to lease some type of capital equipment,
rather than buying it. (b) Provide three reasons for a company to buy some
capital equipment, rather than lease it.
5.
(a)
Identify and briefly describe two phases of the capital budgeting process. (b)
Would saving time by skipping one of these phases in the capital budgeting
process make sense financially?
6.
Financially,
why would a company: (a) increase its dividend; (b) buy back some of its common
stock shares; (c) pay down some of its debt; (d) increase its use of internal
financing; (e) take the public firm private?
7.
Explain
how a company could: (a) avoid a backlog of orders when sales exceed
expectations; (b) avoid product defects on new products; (c) offer more credit
to its customers when it already has a bad debt problem; (d) improve its credit
rating with suppliers after paying
some late; (e) lower its cost of financing when the market interest rate has
increased.
8.
Describe
a business practice that would help a company manage each of the following
financial risks: (a) liquidity risk; (b) interest rate risk; c) credit risk.
9.
(a)
Explain how financial ratio analysis of a firm’s projected cash flow budget
could be efficiently used by its managers for financial planning. (b) Explain
why creating budgets and other financial planning is an important part of
business planning.
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