According to your book Financial Management for Small Businesses, 2nd OER Edition, In the management of cash and marketable securities, why should the primary concern be for safety and liquidity rather than maximization of profit?
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- Which of the following types of financial risk can be effectively managed by holding a lot of short-term deposits on the balance sheet that are used to finance long-term assets of the business such as mortgage loans/credits to allow the business to make profits? Select one: a. Interest Rate Risk b. Liquidity Risk c. Market Risk d. Foreign Exchange RiskIn making a financing decision, how would a financial manager answers questions like: 1. How should the cash required for investment be raised?2. Should we borrow from a bank or should we issue new shares ofstocks?1. Explain the concept of of Principle no. 2 of Financial Management "There is risk-Return Trade Off2.Give examples of financial decisions faced by companies and individuals
- What is meant by the term ‘financial distress’. If we assume that financial distress exists, explain how and why financial distress would cause a firm’s equity to become more risky.How do creditors assess risk when lending funds to a company?11. Which of the following security holders receives a lower returns with low risk? . T-Bill B. Common shareholders C. Stakeholders D. Creditors 12. The advantage of a company compared a sole trader as form of business organisation is: A. Quick decision making B. Access to external professional management skills C. Use of own funds D. Inability to access external funds Thank you!!!
- please answer all the question. 1. Identify two important variables to be considered when making an investment decision. 2. What must a company do in the long run to be able to provide a return to investors and creditors? 3. What is the primary objective of financial accounting? 4. Define net operating cash flows. Briefly explain why periodic net operating cash flows may not be a good indicator of future operating cash flows. 5. What is meant by GAAP? why should all companies follow GAAP in reporting to external users? 6. Explain the roles of the SEC and the FASB in the sitting of accounting standards.State whether the following statements are true or false. 4) Agency Problem creates when managers are acting on behalf of owners’ interest. 5) Increase in current liabilities and decrease in current asset represents inflow cash. 6) If an individual investor buys or sells a currently outstanding stock through a broker, this is a primary market transaction. 7) Activity ratios explain the firm ability to use assets efficiently.Explain commercial banks’ brokerage and intermediation functions. Clearly detail how these functions help overcome the information costs, liquidity risk and price risk arising from financial investments.
- Which of the following actions would improve a firm's liquidity? a. Selling shares and reducing accounts payable. b. Buying bonds. c. Selling bonds and increasing cash. d. Both Selling bonds and increasing cash and Selling shares and reducing accounts payable.Do you agree with each of the following statements? Explain. •EBITDA makes companies with asset-heavy balance sheets look healthier than they may actually be.•EBITDA portrays a company’s debt service ability— but only some types of debt.•EBITDA isn’t a determinant of cash flow at all.What is the purpose of the financial system? O A. To channels funds from persons or businesses without investment opportunities to those who have them. O B. To enable small businesses to sell stock the same way large businesses do in order to level the playing field. O C. To channel information from businesses to the public. O D. To establish financial intermediaries. O E. All of the above.