{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Concept Review for Test 1 (1)

Concept Review for Test 1 (1) - 15 Know why ratio analysis...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Concept Review for Test 1 1) What is the goal of the firm? 2) Explain the three types of business legal organization and know the advantages of each. 3) What are the three main problems a financial manager faces? 4) Know what the agency problem is and why it is a problem for corporations. 5) List all the ways the agency problem can be reduced. 6) Know what the balance sheet and income statement are used for and how to fill one out. 7) Be able to calculate all ratios and interpret them. 8) Given a relevant benchmark be able to say if a ratio is “good” or “bad” 9) Know what liquidity is. 10) What is a noncash item? 11) Know the difference between marginal and average tax rates and be able to calculate total taxes paid and average tax rates. 12) Know the cash flow from assets relationship and the cash flow to creditors and stockholders relationships. 13) Know whether an item is a source of cash or a use of cash. 14) How are common size financial statements different than regular financial statements.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 15) Know why ratio analysis is useful. 16) What do the short term solvency ratios tell us? 17) Why do we subtract inventory when we calculate the acid-test ratio? 18) What does the long term solvency ratios tell us? 19) What are the asset management ratios used for? 20) What information can we learn by looking a companies Profitability ratios? 21) What is the difference between Market values and Book values? 22) What does it mean if a PE ratio is high? What does it mean if it’s very low? 23) What does the market-to-book ratio tell us? 24) Know how to decompose return on equity into its three components using the DuPont Identity and be able to use this to pinpoint trouble areas. 25) Know why benchmarking is important and what is typically used as a benchmark. 26) Be able to use algebra to solve for the missing variable....
View Full Document

{[ snackBarMessage ]}