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Financial Management of US Companies

Which of the following statements is true regarding the goal of financial management?

A U.S. company considering international operations will have a different goal than a company that only conducts operations in the U.S.

The firm's structure (i.e. corporation, sole proprietorship, partnership) is not relevant to the goal of financial management.

A way of aligning management goals to shareholder's interest is to tie managerial compensation to the market value of the firm's stock.

None of the above are true.

Market values reflect which of the following:
The amount someone is willing to pay today for an asset.
The value of the asset based on generally-accepted accounting principles.
The asset's historical cost.
A and B only.

Solution Preview

Which of the following statements is true regarding the goal of financial management?
a. A U.S. company considering international operations will have a different goal than a company that only conducts operations in the U.S.
b. The firm's structure (i.e. corporation, sole proprietorship, partnership) is not relevant to the goal of financial management.
c. A way of aligning management goals to shareholder's interest is to tie managerial compensation to the market value of the firm's stock.
d. None of the above are true.

Answer: d. None of the above are true.
Reason: The financial management has to take three important decision viz. (i) Investment decision i.e., where to invest fund and in what amount, (ii) Financing decision i.e., from where to ...

Solution Summary

The solution discusses financial management of U.S. companies.

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