1. Explain how agency problems interfere with a manager’s ability to achieve the primary goal of financial management.
2. Explain what types of issues are related to the capital structure of a firm.
3. Describe the primary advantages and disadvantages of each of the following types of business organizations: sole proprietorship, partnership, and corporation.
4. How is liquidity both beneficial and harmful to a firm?
5. What does the term “financial leverage” mean, and is it beneficial or harmful to a firm’s stockholders?
6. Explain the difference between accounting value and market value. Which is more important to the financial manager? Why?
7. Why is accounting income not the same as cash flow?
8. What is the difference between a marginal and an average tax rate?
9. What are the components of operating cash flow?
10. Why is interest paid not a component of operating cash flow?