FIN 571 Week 1 DQs

Discussion Questions

Describe in your own words why financial decisions are based on incremental benefits? How does a sunk cost affect the incremental benefit from a decision?

Suppose you are a manager in a manufacturing business. How are the capital markets relevant to the effective performance of your job?

Assume that interest rates have increased substantially. Would this tend to increase or decrease the market value of a firms liabilities (relative to the book value of liabilities)?

Define the term working capital. How is working capital calculated? What does working capital measure?

Explain why the notes to a firms financial statements are an integral part of the financial statements.