1. The value of a firm equals current (present) value of expected (future) cash flows based on the return demanded by investors which is dependent on the risk associated with the firm. Give some firm factors/considerations that impact net cash flows and some investor factors/considerations that impact rate of return.
2. The Chief Financial Officer's (CFO) key subordinates are the Treasurer and the Controller. Compare and contrast their roles.
3. Define the "agency relationship" and the "agency problem". Give some possible mechanisms used by large corporations to motivate managers to act in the shareholders' best interest.
4. Identify three major forms of business organization in the United States and give two advantages and two disadvantages of each.
5. Discuss some potential problems associated with financial statement analysis.
6. Explain the DuPont Identity as it relates to Volume, Margin and Leverage and Shareholder Return.
7. Explain the difference between net income, or accounting profit and net cash flow. Why do these numbers generally differ?
8. Billingsworth Company had earnings per share of $4 last year and it paid a $2 dividend. Total retained earnings increased by $12 million during the year, and the book value per share at year-end was $40. Billingsworth has no preferred stock, and no new common stock was issued during the year. If the company's year-end debt (which equals its total liabilities) was $120 million, what was its year-end debt/assets ratio?
9. Complete the balance sheet and sales information in the table that follows for Iceberg Industries using the following financial data: Debt ratio: 50% Quick ratio: .80x Total assets turnover: 1.5x Days sales outstanding: 36.0 days Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 25% Inventory turnover ratio: 5.0x Balance Sheet: Cash ________________ Accounts payable _______________ Account receivable ________________ Long-term debt $60,000 Inventories ________________ Common stock ______________ Fixed Assets ________________ Retained earnings $97,500 Total Assets $300,000 Total liabilities and equity ______________ Sales ________________ Cost of goods sold ___