.png){kind=logo}
Contents Preface ...........................................................................................................................................................v Chapter 1 The Role and Environment of Managerial Finance...................................................................1 Chapter 2 Financial Statements and Analysis............................................................................................48 Chapter 3 Cash Flow and Financial Planning..........................................................................................104 Chapter 4 Time Value of Money................................................................................................................166 Chapter 5 Risk and Return..........................................................................................................................211 Chapter 6 Interest Rates and Bond Valuation...........................................................................................252 Chapter 7 Stock Valuation..........................................................................................................................298 Chapter 8 Capital Budgeting Cash Flows.................................................................................................343 Chapter 9 Capital Budgeting Techniques..................................................................................................382 Chapter 10 Risk and Refinements In Capital Budgeting..........................................................................413 Chapter 11 The Cost of Capital....................................................................................................................437 Chapter 12 Leverage and Capital Structure................................................................................................480 Chapter 13 Dividend Policy..........................................................................................................................526 Chapter 14 Working Capital and Current Assets Management...............................................................556 Chapter 15 Current Liabilities Management...............................................................................................641 Chapter 16 Hybrid and Derivative Securities.............................................................................................677 Chapter 17 Mergers, LBOs, Divestitures, and Business Failure..............................................................717 Chapter 18 International Managerial Finance............................................................................................760 Principles of Managerial Finance 11e Gitman Lawrence (Test Bank All Chapters) 1 / 4
Chapter 1 The Role and Environment of Managerial Finance „ Learning Goals
- Define finance, its major areas and opportunities available in this field, and the legal forms of
- Describe the managerial finance function and its relationship to economics and accounting.
- Identify the primary activities of the financial manager.
- Explain the goal of the firm, corporate governance, the role of ethics, and the agency issue.
- Understand financial institutions and markets, and the role they play in managerial finance.
- Discuss business taxes and their importance in financial decisions.
- A financial analyst is responsible for maintaining and controlling the firm’s daily cash balances.
business organization.
„ True/False
Frequently manages the firm’s short-term investments and coordinates short-term borrowing and banking relationships.
Answer: FALSE
Level of Difficulty: 1
Learning Goal: 1
Topic: Career Opportunities
- Finance is concerned with the process institutions, markets, and instruments involved in the transfer
of money among and between individuals, businesses and government.
Answer: TRUE
Level of Difficulty: 1
Learning Goal: 1
Topic: Finance Defined
- Financial services are concerned with the duties of the financial manager.
Answer: FALSE
Level of Difficulty: 1
Learning Goal: 1
Topic: Role of Financial Manager 2 / 4
- Gitman Principles of Finance, Eleventh Edition
- Financial managers actively manage the financial affairs of many types of business—financial and
non-financial, private and public, for-profit and not-for-profit.
Answer: TRUE
Level of Difficulty: 1
Learning Goal: 1
Topic: Role of Financial Manager
- In partnerships, owners have unlimited liability and may have to cover debts of other less financially
sound partners.
Answer: TRUE
Level of Difficulty: 1
Learning Goal: 1
Topic: Legal Form of Organization
- In partnerships, a partner can readily transfer his/her wealth to other partners.
Answer: FALSE
Level of Difficulty: 1
Learning Goal: 1
Topic: Legal Form of Organization
- The board of directors is responsible for managing day-to-day operations and carrying out the
policies established by the chief executive officer.
Answer: FALSE
Level of Difficulty: 1
Learning Goal: 1
Topic: Corporate Governance
- The sole proprietor has unlimited liability; his or her total investment in the business can be taken to
satisfy creditors.
Answer: FALSE
Level of Difficulty: 1
Learning Goal: 1
Topic: Legal Form of Organization
- In limited partnerships, only one partner may assume limited liability. All other partners have to
have unlimited liability.
Answer: FALSE
Level of Difficulty: 2
Learning Goal: 1
Topic: Legal Form of Organization
- The president or chief executive officer is elected by the firm’s stockholders and has ultimate
authority to guide corporate affairs and make general policy.
Answer: FALSE
Level of Difficulty: 2
Learning Goal: 1
Topic: Corporate Governance 3 / 4
Chapter 1 The Role and Environment of Managerial Finance 3
- In limited partnerships, partners’ liabilities are limited to their investment in the partnership.
Answer: FALSE
Level of Difficulty: 2
Learning Goal: 1
Topic: Legal Form of Organization
- In limited liability partnerships, the liability protection does not protect partners from their
individual acts of malpractice.
Answer: TRUE
Level of Difficulty: 3
Learning Goal: 1
Topic: Legal Form of Organization
- The capital expenditures analyst/manager is responsible for the evaluation and recommendation of
proposed asset investments and may be involved in the financial aspects of implementation of approved investments.
Answer: TRUE
Level of Difficulty: 3
Learning Goal: 1
Topic: Managerial Finance Functions
- The financial analyst administers the firm’s credit policy by analyzing or managing the evaluation of
credit applications, extending credit, and monitoring and collecting accounts receivable.
Answer: FALSE
Level of Difficulty: 3
Learning Goal: 1
Topic: Managerial Finance Functions
- In large companies, the project finance manager is responsible for coordinating the assets and
liabilities of the employees’ pension fund.
Answer: FALSE
Level of Difficulty: 4
Learning Goal: 1
Topic: Managerial Finance Functions
- In S corporations, stockholders receive all of the organizational benefits of a corporation and the tax
advantages of a partnership, but lose certain tax advantages related to pension plans that are available to traditional corporations.
Answer: TRUE
Level of Difficulty: 4
Learning Goal: 1
Topic: Legal Form of Organization
- Unlike an S corporation, the limited liability corporation (LLC) can own more than 80 percent of
another corporation, and corporations, partnerships, or non-U.S. residents can own limited liability corporation shares.
Answer: TRUE
Level of Difficulty: 4
Learning Goal: 1
Topic: Legal Form of Organization
- / 4
.png)