Essay about FIN 534 Midterm Part 1

Sole proprietorships are the most common type of business in the U.S. They are most commonly chosen because they are the easiest type of business to set up and give the sole owner of the company complete control of the company. There are many benefits to a sole proprietorship in regards to control, profit retention, and convenience.

SUMMARY OF STUDY OBJECTIVES 1Identify the sections of a classified balance sheet. In a classified balance sheet, companies classify assets as current assets; long-term investments; property, plant, and equipment; and intangibles. They classify liabilities as either current or long-term. A stockholders' equity section shows common stock and retained earnings. 2Identify and compute ratios for analyzing a company's profitability. Profitability ratios, such as earnings per share (EPS), measure aspects of the operating success of a company for a given period of time. 3Explain the relationship between a retained earnings statement

* An owner has unlimited liability both personally and as the company owner. Liability is a disadvantage in a sole proprietorship.

The statement of cash flows answers the following questions about cash: (a) Where did the cash come from during the period? (b) What

| (d) 47.37 Equity required (Residual income) = $625,000*40% = $250,000 Dividend paid = $475,000 - $250,000 = $225,000 Dividend payout ratio = 225000/475000 = 47.37%

| The Act requires the Chief Financial Officer and the Controller certify in writing that

· * From the scenario, cite your forecasting conclusions that support TFC’s decision to expand to the West Coast market. Speculate as to whether or not the agency conflict discussed in the scenario could become a roadblock to your conclusions. Provide a rationale for your response.

2. Which of the following financial statements shows the changes in capital during a period of time?

Imagine that you are a financial manager researching investments for your client that align with its investment goals. Use the Internet or the Strayer Library to research any U.S. publicly traded company that you may consider as an investment

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ABC Industries will pay a dividend of $1 next year on their common stock. The company predicts that the dividend will increase by 5 percent each

They also report additions to property and equipment of $162.9 million. Which of the following disclosures would appear on the 2003 statement of cash flows? (5P)

You are a trader in Brazil at the Bolsa exchange writing both Calls and Puts. Call and Put options are available on the US dollar with a strike of 2.2R/$ for a premia of .40R and .20R respectively. Assume each contract controls $100,000. Be sure to draw the payoff and profit/loss diagrams before answering the questions.

The primary goal of a firm is to maximize profits. This implies, of course, that each decision a manager makes is consistent with that goal. Although managers are expected to rely on internally-produced reports, such as balance sheets and income statements, to help them make decisions, most of the information that appears on these statements is period-based rather than decision-based. A balance sheet shows the sum total of a firm’s assets and liabilities at a given point in time. If the firm sold off all of its assets at book value and used the proceeds to pay its liabilities, what remains is owner’s equity: the amount that is owed to shareholders. An income statement is the difference

All you need is money and a realistic vision. 4) Another advantage of a sole proprietorship is that you pay lower taxes. This happens because as you own your own business, the earnings are considered as the owner’s personal income. Because of this, the sole proprietor may be subject to lower taxes than other forms of businesses, such as a partnership or corporation. 5) In addition to all the other advantages listed, another advantage of owning your own business is that you, the owner determines how much you want your firm or company to grow. You decide if you want to stay a small business or expand, whether it be locally or nationally. This can be advantageous because the owner can determine whether it’s better to stay small or grow. If you’re business is successful, you may want to expand to reach more and more clients, helping you make more money and to establish your firm as a successful one. Or you might think that it might be better to stay small and local, because you might not want to take a chance because you might not want to mess with a good thing. Whatever the situation, the owner decides what suites the company.