Questions from Financial Management


Q: In a pro forma balance sheet, what line item would you

In a pro forma balance sheet, what line item would you expect to be constant from year to year in dollar terms and decreasing in terms of percentage of total assets? When would this line item have a s...

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Q: Why might a company have extra inventory on hand above the amount

Why might a company have extra inventory on hand above the amount suggested by the economic order quantity? Make a case for a redundant inventory item in a business setting.

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Q: What does analyzing a company against firms in other industries tell a

What does analyzing a company against firms in other industries tell a financial manager or analyst?

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Q: What are some potential pitfalls of poor short-term financial planning

What are some potential pitfalls of poor short-term financial planning?

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Q: What are liquidity ratios? Given an example of a liquidity ratio

What are liquidity ratios? Given an example of a liquidity ratio and how it helps evaluate a company’s performance or future performance from an outsider’s view.

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Q: What are solvency ratios? Which ratio would be of most interest

What are solvency ratios? Which ratio would be of most interest to a banker considering a debt loan to a company? Why?

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Q: Leeward Sailboats is reviewing the following new boat line: /

Leeward Sailboats is reviewing the following new boat line: At what adjusted WACCs will the company accept this project? Hint: Find the IRR of the project and use it as the maximum adjusted WACC for a...

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Q: What does the P/E ratio tell an outsider about a

What does the P/E ratio tell an outsider about a company? Why might this ratio not provide very compelling evidence on the firm's performance?

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Q: What does analyzing companies against their industry tell a finance manager or

What does analyzing companies against their industry tell a finance manager or financial analyst?

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Q: What is the difference between Chapter 7 and Chapter 11 bankruptcies?

What is the difference between Chapter 7 and Chapter 11 bankruptcies? Why might Chapter 11 be better for claimants than Chapter 7?

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