Finance 330

In: Business and Management

Submitted By HangL
Words 786
Pages 4
1. Generally speaking, the role of the financial manager is to plan for the acquisition and use of funds with the intent to maximize the value of the firm.

True

2. The financial manager must execute his or her duties independent of the other departmental and strategic activities of the firm (i.e. in a vacuum) in order to properly maximize the value of the firm.

False

3. In a competitive marketplace "good ethics" is a wonderful idea but an impractical standard. There are simply too few benefits to be gained from maintaining high business ethics.

False

4. There is an inverse relationship between bond ratings and the required return on a bond; The required return is lowest for AAA rated bonds, and required returns increase as the ratings get lower (worse).

False

5. The balance sheet is a financial statement measuring the flow of funds into and out of various accounts over time while the income statement measures the progress of the firm at a point in time.

True

6. Typically, debentures have higher interest rates than mortgage bonds primarily because mortgage bonds are backed by assets while debentures are unsecured.

True

7. Taxes, payment patterns, and reporting considerations, as well as credit sales and non-cash costs, are reasons why operating cash flows can differ from accounting profits.

True

8. One advantage of using common stock as a source of funds is that common stock does not legally obligate the firm to make payments to stockholders.

True

9. Ratio analysis involves a comparison of the relationships between financial statement accounts so as to analyze the financial position and strength of a firm.

True

10. Genzyme Corporation has seen its days sales outstanding (DSO) decline…...

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