Study Review mgmt PDF

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1.What is the primary goal of financial management? Maximizing shareholder wealth 2. The first step in generating a Pro Forma income statement is The sales forecast 3. Net working capital is the difference between current assets and current liabilities. True 4. Agency theory examines the relationship between: Shareholders of the firm and its managers 5. In examining the liquidity ratios, the primary emphasis is: Ability to pay short-term obligations on time 6. If the company’s inventory turnover is decreasing, the average age of inventory: Will increase 7. If a company chooses to refinance with long-term debt instead of equity, this will have the following effort on the earnings per shares (EPS) calculation: Net income will decrease and the number of shares outstanding will increase 8. The need for an increase or decrease in short-term borrowing can be produced by: Cash budget 9. In the Statement of Cash Flows, the issue (sale) of bonds would reduce the cash flows from financing activities. False 10. If inventory turnover is equal to 10, the company’s Average Holding Period should be 36.5 days. True 11. Ratio analysis can be useful for: Historical trend analysis within a firm. Comparison of rations with a single industry. Measuring the effects of financial. D ) ALL OF THESE ANSWERS ARE CORRECT...