Answer = d: Staggering the service periods of board members can lock-in a certain number of board members.
Course 8 – Creating Value through Financial Management Accounting and Financial Functions usually do not spend sufficient time on "real" financial management. An example of "real" financial management as opposed to accounting would be:
Posting accrual entries to the General Ledger
Answer = b: Finance is more analytical and benchmarking would be more financial oriented as opposed to the processing of transactions which is accounting related.
In order to determine the value of an organization, which of the following would be most important?
Current year's gross sales
Answer = c: An understanding of the future expected cash flows would be important in analyzing the value of a business.
Mergers are a type of financial restructuring that may or may not result in higher values. One reason mergers fail to generate higher value is due to the fact that the acquiring company has:
Paid too much for the target company
Answer = a: It is not unusual for a company to pay too much in acquiring another company. The best companies are typically not for sale and if they to exist, they command a premium price in the marketplace.
One way a large diversified company can create value is to issue new stock to shareholders for a new separate company. This type of restructuring is referred to as a:
Liquidation
