Über die Autorin bzw. den Autor

FRANK J. FABOZZI, PhD, CFA, is Editor of the Journal of Portfolio Management, the Frederick Frank Adjunct Professor of Finance at Yale University's School of Management, and a consultant in the fixed-income and derivatives area. Frank is a Chartered Financial Analyst and Certified Public Accountant who has edited and authored many acclaimed books in finance. He earned a doctorate in economics from the City University of New York in 1972. He is a Fellow of the International Center for Finance at Yale University.
 
PAMELA P. PETERSON, PhD, CFA, is a Professor of Finance at Florida State University, where she teaches undergraduate and doctoral courses in corporate finance. Professor Peterson has published numerous articles in academic and practitioner journals. She is coauthor with Don Chance of the AIMR monograph Real Options and Investment Valuation, and coauthor with David R. Peterson of the AIMR monograph Company Performance and Measures of Value Added. Professor Peterson is also coauthor with Frank J. Fabozzi of Analysis of Financial Statements and Capital Budgeting: Theory and Practice, both published by Wiley.
 
WENDY D. HABEGGER is currently a doctoral student in Finance at Florida State University.

Von der hinteren Coverseite

This comprehensive workbook and study guide is the ideal complement to the bestselling Financial Management and Analysis, Second Edition-the definitive guide to the fundamentals of financial management and analysis.
 
Financial Management and Analysis Workbook, Second Edition allows you to self-test your financial knowledge before putting it to work in real-world situations. Filled with practical examples, this Workbook:
* Tests your comprehension and calculation skills with short-answer questions and problems that help you practice applying the principles in the actual book
* Covers everything from the mathematics of finance, financial statements, and the fundamentals of valuation to capital budgeting, financing options, and international financial management
* Walks you through the corresponding text, chapter by chapter, and provides fill-in-the-blank sections to reinforce the concepts and key vocabulary
 
Along with a complete answer key, this Workbook also covers such essentials as securities and markets, financial institutions and the cost of money, risk and return, managing working capital, structured finance, equipment leasing, and project financing. Whether you need to hone your financial skills or just want a better understanding of the numerous tools and applications of financial management and analysis, this Workbook will help you get on track.

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Financial Management and Analysis Workbook

John Wiley & Sons

Chapter One

FILL IN THE BLANKS

Refer to Chapter 1, pages 3-24 in Financial Management and Analysis.

1. ______________ is the application of economic principles and concepts to business decisions and problem solving. It can be divided into three categories: ______________, ______________, and ______________. ______________ is the management of a firm's cash flow to increase shareholder wealth.

2. ______________ and ______________ are decisions made concerning financial management. Financial managers compare potential ______________ and ______________, otherwise known as expected returns. The uncertainty inherent with these returns is referred to as the ______________.

3. The evaluation of the financial condition and operating performance of a business firm, industry, and economy, and future forecasting of its condition and performance is known as ______________. It is also used to evaluate specific ______________ and ______________ within a firm and the overall ______________ and ______________ outside the firm.

4. ______________, ______________, and ______________ are the three major forms of business organizations. The ______________ provides the largest percentage of U.S. business incomes, but the majority of businesses are ______________. Proprietors and ______________ partners are liable for only business debts, whereas ______________ partners and the owners of a(n) ______________ stand to lose only the initial investment.

5. The ______________ are the contract between the shareholders and corporation and authorizes the corporation to issue stock. The ______________ of a corporation are rules of governance. The owners of a corporation are also called the ______________. They elect a(n) ______________ for representative purposes in the major business decisions. A(n) ______________ corporation is owned by a multitude of share holders while a(n) ______________ is owned by a few shareholders. Corporations whose shares are publicly traded must file financial statements with the ______________.

6. ______________ and ______________ business income are subject to the personal income tax rate of the individual owners, whereas a(n) ______________ pays taxes as a separate legal entity. Cash distributions to shareholders are also taxed as personal income of the owner, leading to what is known as ______________.

7. A hybrid form of business is a(n) ______________ and it combines the best features of a(n) ______________ and a(n) ______________. These types of businesses are treated as a partnership for ______________ purposes, while the owners are not ______________ for firm obligations. A(n) ______________ is a popular form of business that is commenced by a group of persons or entities for a specific business activity in which the relationship only lasts the length of the activity. It may also be structured as a(n) ______________ or a(n) ______________ and is treated according to how it is structured.

8. The single financial goal is to maximize the ______________ wealth, which means to maximize the ______________ of a share of stock for a corporation. The market value of shareholders' equity is the product of the price of ______________ and the number of ______________, which are the total number of shares owned by shareholders. The stock price is equal to the ______________ of all expected future cash flows to owners. In a(n) ______________, the price of a stock reflects all publicly available information so the investor is unlikely to earn ______________ profits by trading on information already known to the public. The only way for an investor to increase the return is to increase the ______________.

9. ______________ profit is the difference between revenues and costs, where costs are the unambiguous costs of doing business. ______________ profits include both explicit and implicit costs. Maximization of ______________ profits maximizes owners' wealth.

10. A(n) ______________ is a person acting in the best interest of another person or group of people. The ______________ is the person or group being represented. Three types of agency costs are ______________, ______________, and ______________. Interests of management and shareholders are aligned when executive compensation packages are designed to encourage ______________-term investment by managers in the stock of the corporation. In particular, ______________ and ______________ might be the better forms of compensation as they require the manager to be an owner in the corporation and hold stock for a specified time.

SHORT ANSWER QUESTIONS

Refer to Chapter 1, pages 3-24 in Financial Management and Analysis.

1. According to market efficiency, if investors who trade on publicly available information are unlikely to earn abnormal profits, then should small investors not invest in the stock market?

2. What are accounting profits or economic profits and which one should an investor be more concerned with?

3. Why might a restricted option compensation program be more effective than a performance shares program in motivating managers to maximize the wealth of the owners?

4. An article in today's Wall Street Journal states a certain drug company has received approval from the Federal Food and Drug Administration to market a new medication for people with heart disease. You believe you should call your broker and invest in the stock of this company immediately because it will undoubtedly increase in value. Given what you know about efficient markets, what advice do you suspect you will receive from your broker?

5. Annie and Alice invested $50,000 and $25,000 respectively in a business enterprise. During the first year of operation, the business had taxable income of $12,000.

a. If the business is organized as a partnership, with profits and losses shared based on the proportion of each partner's original investment, how much of the income will each claim on her personal tax return?

b. After the initial year of success, a weakened economy caused the business to falter. Following four successive years of losses, the assets of the business were $30,000 and the debts were $50,000. The two owners decided to liquidate the business. What are the financial consequences of the dissolution of the business to each owner?

c. If the business had been a limited partnership, with Annie being the general partner who actively ran the business, what would the financial consequences be for each owner?

d. If the business had been a corporation with ownership interests based on the proportion of each woman's initial investment, what would the financial consequences be for each owner?

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