Financial Class

Calculating Ratios Short Answer

1. What is “agency theory?” How can setting the appropriate goals for the firm minimize the agency problem? ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 2. Differentiate between profit maximization and wealth maximization. ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 3. Why must organizations focus on both shareholder wealth and the stakeholders? ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 4. Differentiate between the three financial statements with which managers should be familiar. How are they linked? ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 2 References needed APA-formatted citation and APA style