Advanced Corporate Finance Chapter 1, 4, 8, 9, 5, 6, 10, 11, & 13 Questions and Answers Grade Level 2023

Goal of a Firm - -o The goal of financial management in a for-profit business is to make decisions that increase the value of the stock, or, more generally, increase the value of the equity o Possible financial goals would be to survive, avoid financial distress and bankruptcy, beat the competition, maximize sales or market share, minimize costs, maximize profits, and maintain steady earnings growth. o Managers should not focus on the current stock value because doing so will lead to an overemphasis on short-term profits at the expense of long-term profits. -Capital Budgeting - -o The decision-making process for accepting or rejecting projects. o What long-lived assets should the firm invest in? This question concerns the left side of the balance sheet. -Financing - -Capital Structure and Payout policy -Capital Structure - -The mix of the various debt and equity capital maintained by a firm. Where will the firm get the long-term financing to pay for its investments? Also, what mixture of debt and equity should it use to fund operations? This question concerns the right side of the balance sheet.