ASU FIN 300 EXAM 1 (CH 1-4) 2026 QUESTIONS AND ANSWERS | A+ GRADED | WITH
EXPERT SOLUTIONS
Three areas of finance: - (ANSWER)1. *Financial Management*
-buying/selling of assets
-financing choices
-control costs
2. *Investments*
-purchasing and holding assets & securities
-stocks and bonds
3. *Financial Markets*
-capital markets
-money markets
-financial intermediaries (banks or credit unions)
Productive assets - (ANSWER)the long-term tangible and intangible *assets* a firm uses *to generate
cash flows*
Tangible = equipment etc.
intangible = patents, trademarks, technical experience
when purchase productive assets = *capital budgeting*
Financial Managers should make decisions that maximize - (ANSWER)the *value of the owner's stock*
which helps maximize the *owner's wealth* (the economic value of the assets the owners possesses)
Stakeholder - (ANSWER)anyone other than the owner (stockholder) with a claim on the cash flows of a
firm (employees, customers, creditors, suppliers, the government)
,ASU FIN 300 EXAM 1 (CH 1-4) 2026 QUESTIONS AND ANSWERS | A+ GRADED | WITH
EXPERT SOLUTIONS
3 fundamental decisions in financial management - (ANSWER)a. *Capital budgeting*- which productive
assets to buy
b. *Financing decisions*- raising money to buy more p assets, mainly through selling long term *debt
and equity*
c. *Working capital* decisions- involve how firms *manage their current assets and liabilities*. Enough
money to *pay the bills* and any money left over is invested to earn a return
Capital Budgeting - (ANSWER)*which productive assets* the firm *should purchase* and how much
money the firm can afford to spend
*long term assets* on balance sheets/investments/ productive assets both tangible and intangible
Financing decisions - (ANSWER)how firms raise cash to pay for their iterm-55nvestments
ex: productive assets financed by long term borrowing or equity investment
debt financing - advantage=tax deductable
but increase firms risk because contractual obligation to make interest payments
equity- has no maturity/guarantee of payments.
*long term liability (debt) and equity*
Working capital management decisions - (ANSWER)how to manage the firm's *current assets and
current liabilities*
*day to day* management of short term asserts and liabilities
-mismanagement cause firm to go into debt/*bankruptcy*
, ASU FIN 300 EXAM 1 (CH 1-4) 2026 QUESTIONS AND ANSWERS | A+ GRADED | WITH
EXPERT SOLUTIONS
-*profitability affected*
Capital structure - (ANSWER)the mix of debt and equity that is used to finance a firm
Net working capital - (ANSWER)the dollar difference between total current assets and total current
liabilities
Capital Markets - (ANSWER)financial markets where equity and debt instruments with maturities
greater than one year are traded
Residual Cash Flow - (ANSWER)cash remaining after a firm has paid operating expenses and what it
owes creditors and taxes, can be distributed to owners as cash dividend or by repurchasing shares or
reinvested into business
Cash flows between firms and stake/stockholders - (ANSWER)A. Cash flows generated by productive
assets through sale of goods/services → management invests in current and productive long term assets
→ cash paid as wages, to suppliers, as interest, as taxes → to employees, suppliers, creditors and
government (stockholders)
B. Residual Cash Flow
→ cash reinvested in business
→ cash used to pay dividends/repurchase shares
Forms of Business Organization - (ANSWER)1. *Sole proprietorship*- one person
2. *General Partnership*
3. *Limited Partnership*
4. *Limited Liability* Partnership or Company (LLP / LCC)
5. *Corporation*
a) C corp
EXPERT SOLUTIONS
Three areas of finance: - (ANSWER)1. *Financial Management*
-buying/selling of assets
-financing choices
-control costs
2. *Investments*
-purchasing and holding assets & securities
-stocks and bonds
3. *Financial Markets*
-capital markets
-money markets
-financial intermediaries (banks or credit unions)
Productive assets - (ANSWER)the long-term tangible and intangible *assets* a firm uses *to generate
cash flows*
Tangible = equipment etc.
intangible = patents, trademarks, technical experience
when purchase productive assets = *capital budgeting*
Financial Managers should make decisions that maximize - (ANSWER)the *value of the owner's stock*
which helps maximize the *owner's wealth* (the economic value of the assets the owners possesses)
Stakeholder - (ANSWER)anyone other than the owner (stockholder) with a claim on the cash flows of a
firm (employees, customers, creditors, suppliers, the government)
,ASU FIN 300 EXAM 1 (CH 1-4) 2026 QUESTIONS AND ANSWERS | A+ GRADED | WITH
EXPERT SOLUTIONS
3 fundamental decisions in financial management - (ANSWER)a. *Capital budgeting*- which productive
assets to buy
b. *Financing decisions*- raising money to buy more p assets, mainly through selling long term *debt
and equity*
c. *Working capital* decisions- involve how firms *manage their current assets and liabilities*. Enough
money to *pay the bills* and any money left over is invested to earn a return
Capital Budgeting - (ANSWER)*which productive assets* the firm *should purchase* and how much
money the firm can afford to spend
*long term assets* on balance sheets/investments/ productive assets both tangible and intangible
Financing decisions - (ANSWER)how firms raise cash to pay for their iterm-55nvestments
ex: productive assets financed by long term borrowing or equity investment
debt financing - advantage=tax deductable
but increase firms risk because contractual obligation to make interest payments
equity- has no maturity/guarantee of payments.
*long term liability (debt) and equity*
Working capital management decisions - (ANSWER)how to manage the firm's *current assets and
current liabilities*
*day to day* management of short term asserts and liabilities
-mismanagement cause firm to go into debt/*bankruptcy*
, ASU FIN 300 EXAM 1 (CH 1-4) 2026 QUESTIONS AND ANSWERS | A+ GRADED | WITH
EXPERT SOLUTIONS
-*profitability affected*
Capital structure - (ANSWER)the mix of debt and equity that is used to finance a firm
Net working capital - (ANSWER)the dollar difference between total current assets and total current
liabilities
Capital Markets - (ANSWER)financial markets where equity and debt instruments with maturities
greater than one year are traded
Residual Cash Flow - (ANSWER)cash remaining after a firm has paid operating expenses and what it
owes creditors and taxes, can be distributed to owners as cash dividend or by repurchasing shares or
reinvested into business
Cash flows between firms and stake/stockholders - (ANSWER)A. Cash flows generated by productive
assets through sale of goods/services → management invests in current and productive long term assets
→ cash paid as wages, to suppliers, as interest, as taxes → to employees, suppliers, creditors and
government (stockholders)
B. Residual Cash Flow
→ cash reinvested in business
→ cash used to pay dividends/repurchase shares
Forms of Business Organization - (ANSWER)1. *Sole proprietorship*- one person
2. *General Partnership*
3. *Limited Partnership*
4. *Limited Liability* Partnership or Company (LLP / LCC)
5. *Corporation*
a) C corp
