Corporation Investment and Financing Decisions

Maximize the value of the business or firm.

The view they have about the real objective of the firm.

To satisfy multiple interests (stockholders, labor, and customers).

<p>Market share or profitability.</p> Signup and view all the answers

<p>It can be argued that the theory built on it is flawed as well.</p> Signup and view all the answers

<p>Maximizing the value of the business or firm.</p> Signup and view all the answers

<p>Investment decision and financing decision</p> Signup and view all the answers

<p>It involves deciding when to shut down and dispose of assets if profits decline.</p> Signup and view all the answers

<p>The corporation has to manage and control the risks of its investments.</p> Signup and view all the answers

<p>It includes meeting obligations to banks, bondholders, and stockholders from the past.</p> Signup and view all the answers

<p>Today’s capital investments generate future returns, often in the distant future, so the financial manager must pay attention to the timing of project returns.</p> Signup and view all the answers

<p>Research and development (R&amp;D), advertising, and marketing.</p> Signup and view all the answers

<p>Value comes mainly from the asset side of the balance sheet because good investment decisions are crucial for creating value for the corporation.</p> Signup and view all the answers

<p>Financing decisions can destroy value if they are poorly made, leading to excessive debt levels or being unprepared for unexpected financial challenges.</p> Signup and view all the answers

<p>A financial manager should be aware of risks like excessive debt, economic downturns, commodity price fluctuations, interest rate changes, exchange rate movements, and adverse political events.</p> Signup and view all the answers

<p>Companies can be affected by recessions through decreased consumer spending and overall economic slowdown. Changes in external factors like commodity prices, interest rates, and exchange rates can impact costs, revenues, and profitability.</p> Signup and view all the answers

<p>Working capital management involves managing a firm's short-term assets (like inventory) and liabilities (like money owed to suppliers) to ensure smooth operations and financial health.</p> Signup and view all the answers

<p>Companies should hedge or insure against risks to protect themselves from potential financial losses due to adverse events like commodity price fluctuations, interest rate changes, or exchange rate movements.</p> Signup and view all the answers

<p>Short-term cash management, currency trading, financing transactions, and bank relationships.</p> Signup and view all the answers

<p>Managing the company’s internal accounting systems, overseeing preparation of financial statements and tax returns.</p> Signup and view all the answers

<p>Top management and engineers.</p> Signup and view all the answers

<p>They amount to decisions not to invest in other types of real assets.</p> Signup and view all the answers

<p>Anyone responsible for an investment or financing decision.</p> Signup and view all the answers

<p>Tracing how money flows from investors to the corporation and back to investors again.</p> Signup and view all the answers

<p>a. To be as rich as possible; b. To transform wealth into the most desirable time pattern of consumption; c. To manage the risk characteristics of the consumption plan.</p> Signup and view all the answers

<p>Stockholders can achieve the best time pattern of consumption on their own with access to competitive financial markets.</p> Signup and view all the answers

<p>By increasing their wealth through increasing the market value of the firm and the price of its shares.</p> Signup and view all the answers

<p>Value-maximization principle.</p> Signup and view all the answers

<p>To be richer rather than poorer.</p> Signup and view all the answers

<p>Maximizing shareholder value.</p> Signup and view all the answers