FNAN - EXAM 2022 .

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1. all successful companies must sell their products/services at prices that are high enough to cover all operating costs & to compensate owners and creditors for their exposure to risk 2. produce a... t a low cost or provide a better service/product or have attractive location/delivery - CORRECT ANSWER what are the 2 requirements for a firm to be successful? 1. successful companies have skilled people - executives long-term visions, smart, experienced, aware of operating environment and challenges - middle management loyal, intelligent, understand the goals and mission, hard working - labor force-talented, dedicated, knows management supports them 2. have strong relationships with groups outside of the company - suppliers ; know their customers requirements &e expectations - customers ; company knows who their customers are, their desires and expectations 3. have sufficient capital to execute plans and support operations Internal Funds > Retained Earnings = non distributed profits (balance sheet & contribution from Income statement) External Funds > band loans, issue bonds, stock bonds - CORRECT ANSWER what are the 3 key attributes common to successful companies? Agency Theory - CORRECT ANSWER a supposition that explains the relationship between principals and agents in business Stock Price (under the control of management) is a FUNCTION of expected cash flows, timing of cash flows, risk of cash flows, dividend policy & capital structure > stock price = function (ECF,TCF,RCF,DP,CS) > EFC ; the higher the EFC the higher the stock price > TCF ; when it will occur, the sooner we receive it the better > RCF ; uncertainty, the higher the risk the lower the value > DP ; how much they will pay out This study source was downloaded by 100000840275362 from CourseHero.com on 04-29-2022 08:19:56 GMT -05:00 https://www.coursehero.com/file/142083033/FNAN-EXAM-2022-pdf/ > CS ; the financing mix, how the firm is financed - some debt is good for capital structure, too much debt is bad - CORRECT ANSWER write/describe the stock value function-model? Internal Financing - CORRECT ANSWER financing derived from the savings of a country's citizens Liquidity Ratios - CORRECT ANSWER measures if the firm can pay its bills and if the firm has adequate current assets to meet its obligations Corporation - CORRECT ANSWER a company or group of people authorized to act as a single entity (legally a person) and recognized as such in law Activity Ratios - CORRECT ANSWER measure the speed with which various accounts are converted into sales or cash, (inflows or outflows) Depreciation - CORRECT ANSWER the allocation of the cost of a fixed asset over some prescribed time period NOT a valuation process reducing book value Retained Earnings - CORRECT ANSWER the amount of net income retained in the corporation Cash Flow from Operations - CORRECT ANSWER cash flows that are directly related to the production and sale of the firm's products/services Profitability Ratios - CORRECT ANSWER ratios that measure the rate of return a firm is earning on various measures of investment Debt Ratios - CORRECT ANSWER (total liabilities/assets) > how much debt is being used in the financial structure? > how much financial leverage we have? > how much financial risk? This study source was downloaded by 100000840275362 from CourseHero.com on 04-29-2022 08:19:56 GMT -05:00 https://www.coursehero.com/file/142083033/FNAN-EXAM-2022-pdf/ Comparative Analysis - CORRECT ANSWER compare to the industry average (benchmark) a method of determining the value of property in which the selling prices of similar properties are used as the basis for estimating the value of the subject property Trend Analysis - CORRECT ANSWER [Show More]

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