Business assignments
Fin 5213 Financial Management Dr. Ying-Chou Lin
Week1 Written Assignment Questions
What are the main advantages and disadvantages of organizing a firm as a corporation?
In recent years, top managers have been given large packages of options, giving them the right to buy stock in the firm at a fixed price. Will these compensation schemes make managers more responsive to stockholders? Why, or why not? Are lenders to the firm affected by these compensation schemes?
Classify each of the following items as an inflow (I) or an outflow (O) of cash or as neither (N). (Tip: You can use class notes p.24-30 to help you identify which is cash inflow or cash outflow).
Item
Charge ($)
Item
Charge ($)
Cash
+600
Accounts receivable
-900
Accounts payable
-1,200
Net profits
+700
Notes payable
+800
Depreciation
+200
Long-term debt
-2,500
Repurchase of stock
+500
Inventory
+400
Cash dividends
+300
Fixed assets
+600
Sale of stock
+1,300
Assume current liabilities are $10,000, the current ratio is 2.0, and the quick ration is 1.0. How much does the firm have in inventory and other assets and how much does the firm have in current assets?
Using the financial statements and stock price information of Mydeco Corp in the next page to answer following questions:
How did Mydeco’s accounts receivable days change over this period?
How did Mydeco’s inventory days change over this period?
Based on your analysis, has Mydeco improved its management of its working capital during this time period?
Compare accounts payable days in 2012 and 2016.
Did this change in accounts payable days improve or worsen Mydeco’s cash position in 2016?
