Assignment Discussion:
Action Items:
BEFORE you come to the session,
Part 1: Read Chapters 1 - 3 in your textbook, which can be accessed via the Connect Plus object.
Part 2: Complete Week 1 Readings and Preparation.
Part 3: Begin working on the assignment Wk1: Practice Exercises. Bring your questions on the assignment to the Meet session.
Part 4: Reflect on the following questions:
A. Consider the statement in the textbook that the goal of financial management is to maximize the market value of owners' equity (or equivalently in the case of public companies: maximize the current per share value of existing stock).
Question: Do you think such a goal under serves other stakeholders in the firm, such as customers, employees, and the community?
B. Consider the following two statements from a June 2016 report:
- Cash Balance Reaches New High: The S&P 500 (Ex-Financials) cash and short-term investments balance was $1.45 trillion at the end of the first quarter (Feb-April), which represented a 5.7% increase year -over-year and a 1% jump from Q4 2015. The balance in Q1represented the largest cash total in at least ten years.
- Cash to Debt Ratio Falls to Lowest Level since Q2 2009: The cash to debt ratio for the S&P 500 (Ex-Financials) index fell 3.8% to 34.7% in Q1, which marked the lowest ratio since Q2 2009.
Question: Why do you think cash balances among non-financial companies listed on the S&P are so high? Should they be higher given the reduced cash coverage of outstanding debt?
Please note: Your instructor may choose to provide alternative or supplemental questions to those posted here.
Attachment:- Readings and Preparation.rar