BUSN 379 Week 1 : Business Ethics – Homework ES
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1. (TCO 1) Why is maximization of the current value per share a more appropriate financial management goal than profit maximization? (Points : 3)
Because by maximizing the current stock value you also maximize the companyÂ’s profit for the year.
Because this criterion is non-ambiguous.
Because financial managers always act in the best interest of shareholders.
B and C
2. (TCO 1) Market value is important to the financial manager because: (Points : 3)
It reflects the value of the asset based on generally-accepted accounting principles.
Is a crucial component of the balance sheet and can impact the financial statements.
Market values reflect the amount someone is willing to pay today for an asset.
The market value of an asset reflects its historical cost.
3. For this question, use the information for Sports Baseballs, Inc. Sports Baseballs, Inc. is a corporation that manufacturers and sells baseballs across several states in the Southeast. It had sales of $2.7 million during the last year. Expenses were as follows:
Cost of goods sold…………………………. $1.2 million
Administrative expenses…………………… $250,000
Marketing and selling expenses…………… $175,000
Depreciation…………………………………. $500,000
Interest expense……………………………. $200,000
Dividends paid………………………………. $150,000
(TCO 1) Suppose that Sports Baseball has 30,000 shares of stock. What is the dividends per share figure?
(Points : 3)
5.0
8.75
5.25
8.50
4. For this question, use the information for Sports Baseballs, Inc. Sports Baseballs, Inc. is a corporation that manufacturers and sells baseballs across several states in the Southeast. It had sales of $2.7 million during the last year. Expenses were as follows:
Cost of goods sold…………………………. $1.2 million
Administrative expenses…………………… $250,000
Marketing and selling expenses…………… $175,000
Depreciation…………………………………. $500,000
Interest expense……………………………. $200,000
Dividends paid………………………………. $150,000
(TCO 1) Assuming a tax rate of 30%, the percentage of dividends per net income is approximately ______ and operating cash flow is _________ than net income.
Hint: You need to calculate the net income and divide dividends by the net income.
(Points : 3)
30% and lower
60% and lower
30% and higher
60% and higher
5. For this question, use the information for Sports Baseballs, Inc. Sports Baseballs, Inc. is a corporation that manufacturers and sells baseballs across several states in the Southeast. It had sales of $2.7 million during the last year. Expenses were as follows:
Cost of goods sold…………………………. $1.2 million
Administrative expenses…………………… $250,000
Marketing and selling expenses…………… $175,000
Depreciation…………………………………. $500,000
Interest expense……………………………. $200,000
Dividends paid………………………………. $150,000
(TCO 1) Select all items that will be included in Sports Baseballs, Inc. Balance Sheet. For this exercise you will be choosing more than one option for your answer:
(Points : 3)
Cash on hand
Fixed assets
Net sales
Administrative expenses
Taxes
Long-term debt
Dividends paid
Marketing expenses
Consulting revenues
6. (TCO 1) Which one of the following activities best exemplify working capital management. For this exercise you will be choosing more than one option for your answer: (Points : 6)
Identify three good investment opportunities for the firm.
Obtain a short-term loan to purchase materials.
Assess the level of inventory to be kept on hand.
Sale long-term bonds to raise funds for a new machine.
Determine the return of a potential project.
Calculate the cash flows for a project.
Manage payments to suppliers.
7. (TCO 1) Match the following terms with the examples as appropriate:
(Points : 4)
Potential Matches:
1 : McDonald’s work to redesign packaging items with recyclable materials.
2 : Microsoft’s monopolistic behavior.
3 : Martha Stewart’s sale of ImClone stock as result of information provided by the company’s CEO before an announcement was made public that significantly decrease ImClone’s stock price.
4 : Parmalat’s deliberate fraudulent accounting practices.
5 : established an oversight board responsible for improving auditing standards within companies.
8. (TCO 1) Can you provide some examples of recent well-known unethical behavior cases? Explain the situation in one or two sentences. (Points : 5)
