Questions from Financial Management

Q: The income statement shows “flows” over a period of time

The income statement shows “flows” over a period of time, while the balance sheet shows accounts at a given point in time. Explain how these two concepts are combined when we calculate free cash flow....

Q: How is multinational financial management different from financial management as practiced by

How is multinational financial management different from financial management as practiced by a firm that has no direct contacts with foreign firms or customers? What special problems and challenges d...

Q: Taxes affect many financial decisions. Explain how: (a

Taxes affect many financial decisions. Explain how: (a) interest and dividend payments are treated for tax purposes, from both a company’s and an investor’s perspective, and (b) how dividends and cap...

Q: If Congress wants to stimulate the economy, explain how it might

If Congress wants to stimulate the economy, explain how it might alter each of the following: (a) personal and corporate tax rates, (b) depreciation schedules, and (c) the differential between the...

Q: How are the balance sheet and the income statement related to one

How are the balance sheet and the income statement related to one another? How would you explain to a layperson the primary purpose of each of the statements? Which of the numbers in the income statem...

Q: Two investors are evaluating General Electric’s stock for possible purchase. They

Two investors are evaluating General Electric’s stock for possible purchase. They agree on the expected value of D1 and also on the expected future dividend growth rate. Further, they agree on the ris...

Q: An unlevered firm has a value of $500 million. An

An unlevered firm has a value of $500 million. An otherwise identical but levered firm has $50 million in debt. Under the MM zero-tax model, what is the value of the levered firm?

Q: David Lyons, CEO of Lyons Solar Technologies, is concerned about

David Lyons, CEO of Lyons Solar Technologies, is concerned about his firm’s level of debt financing. The company uses short-term debt to finance its temporary working capital needs, but it does not us...

Q: The first part of the case, presented in Chapter 6

The first part of the case, presented in Chapter 6, discussed the situation of Computron Industries after an expansion program. A large loss occurred in 2015, rather than the expected profit. As a re...

Q: What is operating capital, and why is it important?

What is operating capital, and why is it important?