According to your book Financial Management for Small Businesses, 2nd OER Edition, In the management of cash and marketable securities, why should the primary concern be for safety and liquidity rather than maximization of profit?
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- Which of the following types of financial risk can be effectively managed by holding a lot of short-term deposits on the balance sheet that are used to finance long-term assets of the business such as mortgage loans/credits to allow the business to make profits? Select one: a. Interest Rate Risk b. Liquidity Risk c. Market Risk d. Foreign Exchange RiskDiscuss the factors that are likely to influence the desired level of cash of a company Outline the advantages and disadvantages of using short term debt, as opposed to long term debt, in the financing of working capital Why cash flows rather than profits are most desirable in financial management? Explain the term “agency relationships” and discuss the conflicts that might exist in therelationship between’i) Shareholder and managersii) Shareholders and creditorsa. Discuss the factors that are likely to influence the desired level of cash of a company b. Outline the advantages and disadvantages of using short term debt, as opposed to longterm debt, in the financing of working capitalc. Why cash flows rather than profits are most desirable in financial management? d. Explain the term “agency relationships” and discuss the conflicts that might exist in therelationship between’i) Shareholder and managersii) Shareholders and creditorsWhat steps may be taken to overcome these conflicts?
- Information risk is a. The cost a company incurs to issue and service equity and debt. b. The risk of the client not being able to pay off a bank loan. c. The company's cost of capital. d. The risk that the information in financial statements is materially misstated.In making a financing decision, how would a financial manager answers questions like: 1. How should the cash required for investment be raised?2. Should we borrow from a bank or should we issue new shares ofstocks?How would the SCF indicate to an investor that the company is experiencing a "cash crunch?"
- Identify which one of the following statement is not correct: a. Dividend decision is the primary function of the financial manager b. The financial manager need not concentrate on mobilization of finance c. Cash management plays a major role in the area of finance d. Management control is an emerging role of the financial managerDiscuss the factors that are likely to influence the desired level of cash of a companyb. Outline the advantages and disadvantages of using short term debt, as opposed to longterm debt, in the financing of working capital c. Why cash flows rather than profits are most desirable in financial management? d. Explain the term “agency relationships” and discuss the conflicts that might exist in therelationship between’i) Shareholder and managersii) Shareholders and creditorsWhat steps may be taken to overcome these conflicts?Do you agree with each of the following statements? Explain. •EBITDA makes companies with asset-heavy balance sheets look healthier than they may actually be.•EBITDA portrays a company’s debt service ability— but only some types of debt.•EBITDA isn’t a determinant of cash flow at all.
- a)- Do manager of a firm care more about their EPS than retained earnings? Explain why, just start your explanation with because.... b) Do vendors of a firm care more about cash flow than EPS? Explain why, just start your explanation with because.... c) Do investors care more about EPS than stock price? Explain why d) Do banks (or creditors who loaned money to a firm) care more about the firm's working capital or the firm's dividends? Which one and why? e. Which of the following will raise a firm's stock price: stock repurchases or a new stock issue? Briefly explain why? Start your explanation with because...Explain each action below is appropriated or not when a bank manager feels the bank is holding too much capital, and why? • Sell or retire stock• Increase dividends to reduce retained earnings• Increase asset growth via debtThe managers of a firm wish to expand the firm's operations and are trying to determine the amount of debt financing the firm should obtain versus the amount of equity financing that should be raised. The managers have asked you to explain the effects that both of these forms of financing would have on the cash flows of the firm. Write a short response to this request.
