Financial statement analysis

Assignment Help Financial Management

Reference no: EM131839703

1. Financial statement analysis is:

I. the process of looking for items that are exceptions to the norm.

II. only used for internal purposes.

III. useful to both creditors and shareholders.

IV. useful when forecasting future performance.

a. II and IV only

b. II, III, and IV only

c. I, III, and IV only

d. I, II, III, and IV

e. I and III only

2. A fundamental problem in finance is that of a principal agent relationship. This type of problem exists between managers of a firm and its shareholders.

a. All such problems can be solved completely by writing good management contracts.

b. The use of stock options to reward managers addresses this issue perfectly.

c. Writing good management contracts and having good corporate governance policies in place help to modify the severity of all such problems.

d. Both "b" and "c" are correct answers

e. Create a firm with only employees as shareholders and managers, this way all conflicts will be resolved.

Reference no: EM131839703

Questions Cloud

Define the integrated approach to develop net cash flows : Define the integrated approach to develop net cash flows for feasible project alternatives, detailing components and identify their benefits in using techniques

What happens to the expected return on the stock : If Northern Sludge issues an additional $11 million of common stock and uses this money to retire debt, what happens to the expected return on the stock?

What is the firm after-tax component cost of debt : What is the firm's after-tax component cost of debt for purposes of calculating the WACC?

Value of the dollar with respect to foreign currencies : What will this do to the value of the dollar with respect to foreign currencies?

Financial statement analysis : Financial statement analysis is. A fundamental problem in finance is that of a principal agent relationship.

First withdrawal is at end of your first retirement year : Assume that you have 40 years until retirement and have just started your first job. assume that your first withdrawal is at end of your first retirement year.

What is the highest expected return these bonds : Ralston Purina had? AA-rated, 10-year bonds outstanding with a yield to maturity of 1.77%. What is the highest expected return these bonds could? have?

Present value of the interest tax shields from this debt : Your firm currently has $96 million in debt outstanding with a 6% interest rate. What is the present value of the interest tax shields from this debt?

You have forty years until you retire : You have forty years until you retire. Today you have no investments. how much will you have on the day that you make the last of your forty investments?

User Account

All Pages