Which of the Following Would Be Best Considered to Be

question 85

Multiple Choice

Which of the following would be best considered to be an agency conflict problem in the behavior of the following financial managers?

• A) Bill chooses to pursue a risky investment for the company's funds because his compensation will substantially rise if it succeeds.
• B) Sue instructs her staff to skip safety inspections in one of the company's factories, knowing that it will likely fail the inspection and incur significant costs to fix.
• C) James ignores an opportunity for his company to invest in a new drug to fight Alzheimer's disease, judging the drug's chances of succeeding as low.
• D) Michael chooses to enhance his firm's reputation at some cost to its shareholders by sponsoring a team of athletes for the Olympics.

Understand the concepts of net cash provided by or used in operating, investing, and financing activities.

Ability to calculate and interpret free cash flow.

Understand the impact of changes in balance sheet accounts on the cash flow statement.

Recognize correct treatments of specific items in the operating activities section of the cash flow statement.

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Definitions:

Short Constructions

Short constructions are concise phrases or sentences used to communicate ideas succinctly and clearly.

Instructive Format

A method of presenting information designed to teach or guide the audience through content or procedures.

Hierarchy

Hierarchy is a system in which members of an organization or society are ranked according to relative status or authority.

Consistency

The quality of maintaining uniformity, coherence, and reliability in actions, processes, or results over time.