Problem:
1. There are 10 to 12 different principles of finance that are briefly discussed. For example one of them is the principles of diversification. Please pick two (not including the principle of diversification!) and explain how they can apply to your personal financial life or to your company.
2. Financial statements are usually done on an accrual basis of accounting. But an accrual based financial statement does not reflect actual cash flows. How might an accrual based income statement differ from a cash based income statement? In a cash based balance sheet (as contrasted to an accrual based balance sheet) would there be accounts receivable listed? Why or why not?
3. Compare and contrast the market value of an asset or liability with the book value.
4. I think there as soon as a stakeholder buys a share of a firm, they must sign a contract on the % of profit that they get. The stakeholder should know how much the firm is making at all times in order to ensure that the percentage given initially will be respected. Therefore, the shareholder gets the other percentage and there is not fear of what the stakeholder wants or retaliates against. Shareholders are the ones that are on the front lines of the firm, therefore they should receive more than the stakeholders regardless of how much money is made.