19 During the recent financial crisis many financial managers and corporate

19 during the recent financial crisis many financial

This preview shows page 214 out of 214 pages.

19. During the recent financial crisis, many financial managers and corporate officers have been criticized for (a) poor decisions, (b) lack of ethical behavior, (c) large salaries, (d) lucrative severance packages worth millions of dollars, and (e) extravagant lifestyles. Is this criticism justified? Justify your opinion. 20. What does a financial manager do? How can he or she monitor a firm’s financial success? 21. If you were the financial manager of Stars Addis Clothing, what would you do with the excess cash that the firm expects in the second and fourth quarters? (See Table 5.4) 22. Develop a personal cash budget for the next six months. Explain what you would do if there are budget shortfalls or excess cash amounts at the end of any month during the six-month period. 23. Why would a lender offer unsecured loans when it could demand collateral? 24. How can a small-business owner or corporate manager use financial leverage to improve the firm’s profits and return on owners’ equity? 25. In what circumstances might a large corporation sell stock rather than bonds to obtain long- term financing? In what circumstances would it sell bonds rather than stock?
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