Rejas, Kimberly H.

Business Finance Exercise 1

BSHM 3D

I.  TRUE OR FALSE (2 pts each)

1. The task of a financial manager is necessary for a business. TRUE
2. The profit maximization implies that every decision relating to business is evaluated in
the light of profits. TRUE
3. Business finance is concerned with the fundamentals of managing one’s own personal
money affairs. FALSE
4. Construction industries are involved in the conversion of raw materials into finished
products. FALSE
5. Finance is the study of the acquisition and investment of cash for the purpose of
enhancing value and wealth. TRUE
6. Examples of businesses under commerce are movie houses and  television
stations.FALSE
7. If cash outflows are larger than cash inflows, the result normally raise the share price of
a company. FALSE
8. The market value of the share is mainly determined by market forces, for instance the
demand for and supply of the share. TRUE
9. The primary goal of the firm is to maximize the wealth of the owners. TRUE
10. Cash flow refers to the inflows and outflows of cash. TRUE

II. Classify the following businesses according to the following divisions: 

Commerce
Industry - Generic
Industry - Extractive
Industry - Manufacturing
Industry - Construction
Services - Recreation
Services - Personal
Services - Finance
Services - Education

     
1. Restaurants - Services - Personal
2. Atlas mining corporation - Industry - Extractive
3. A1 tutorial services - Services - Education
4. Radio station - Services - Recreation
5. Reliable construction - Industry - Construction
6. Tourist transport service - Services - Personal
7. Unity Convenience Store - Commerce
8. International Pharmaceuticals, Inc. - Industry - Manufacturing
 9. Trinidad Savings and Loan Association - Services - Finance
10. Carrot farming - Industry - Generic
11. Excellent Teachers Review Center - Services - Education
12. Martha’s Bakeshop - Services - Personal
13. Doreen’s Tilapia Culture - Industry - Generic
14.  Real Estate Business - Services - Finance
15. John’s Fishing activities - Industry - Extractive
16. Generous Banking Corporation - Services - Finance
17. Hotels - Services - Personal
18. Auto Tires Supply - Industry - Manufacturing
19. Good Pals Leisure Plaza
20. Oil mining - Industry - Extractive

III.  Essay
1. Discuss the role of a finance manager in relation to profit maximization theory and the
shareholders’ wealth maximization. (10 pts)

 the role of a finance manager in relations to profit maximization is