Reference no: EM132482288 , Length: 2 pages

Discussion

Action Items

BEFORE you come to the session,

Part 1. Read Chapters 1 - 3 in your textbook, which can be accessed via the Connect Plus object.

Part  2. Complete Week 1 Readings and Preparation.

Part  3. Begin working on the assignment Wk1: Practice Exercises. Bring your questions on the assignment to the Meet session.

Part  4. Reflect on the following questions:

A. Consider the statement in the textbook that the goal of financial management is to maximize the market value of owners' equity (or equivalently in the case of public companies: maximize the current per share value of existing stock).

Question: Do you think such a goal underserves other stakeholders in the firm, such as customers, employees, and the community?

B. Consider the following two statements from a June 2016 report:
• Cash Balance Reaches New High: The S&P 500 (Ex-Financials) cash and short-term investments balance was $1.45 trillion at the end of the first quarter (Feb-April), which represented a 5.7% increase year -over-year and a 1% jump from Q4 2015. The balance in Q1represented the largest cash total in at least ten years.

• Cash to Debt Ratio Falls to Lowest Level since Q2 2009: The cash to debt ratio for the S&P 500 (Ex-Financials) index fell 3.8% to 34.7% in Q1, which marked the lowest ratio since Q2 2009.

Question: Why do you think cash balances among non-financial companies listed on the S&P are so high? Should they be higher given the reduced cash coverage of outstanding debt?

Please note: Your instructor may choose to provide alternative or supplemental questions to those posted here.

Attachment:- Discussion - Readings and Preparation.rar