Financial Class

Calculating Ratios Short Answer

1. What is “agency theory?” How can setting the appropriate goals for the firm minimize the agency problem? ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

2. Differentiate between profit maximization and wealth maximization. ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

3. Why must organizations focus on both shareholder wealth and the stakeholders? ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

4. Differentiate between the three financial statements with which managers should be familiar. How are they linked? ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

2 references are needed APA-formatted citation and APA style

 
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