Answer All Questions; Submit as One Essay)

1. AGENCY PROBLEMS

Who owns a corporation? Describe the process whereby the owners control the firms management. Describe the main reason why an agency relationship exists in the corporate form of organization. In this context, describe the types of problems that can arise.

2. ENTERPRISE VALUE

A firms enterprise value is equal to the market value of its debt and equity, less the firms holdings of cash and cash equivalents. This figure is particularly of interest to potential purchasers of the firm. Why?

3. CURRENT RATIO

Explain what it means for a firm to have a current ratio of .50. Would the firm be better off with a current ratio of 1.50? What if it were 15.0? Explain your answers.

4. SALES FORECASTS

Why do you think most long term financial planning begins with sales forecasts? Stated differently, why are future sales the key input?

Please number each of your answers. This is very important so that I understand which questions you are responding to.

Post essay as a single MS Word attachment by Sunday at 11:59 PM eastern Time

Assignment Grading Criteria:

Thoroughly answered all of the questions: 60 points possible

Spelling/Grammar at the college level: 20 points possible

References to course material with proper APA format: 20 points possible

Total: 100 points