Test Bank and Instructor Resources for Foundations of Finance, 10th Edition

Features

Comprehensive coverage of financial concepts

  • Revised - Extensive updates have been made to the material in response to the continued development of financial thought, reviewer comments, and passage of the Tax Cuts and Jobs Act of 2017. They include (but are not limited to):
    • recent developments in the financial markets;
    • new tax laws and their implications; and
    • changes to interest and exchange rates.
  • Five principles, presented at the beginning of the book, provide students with a strong foundation of the key concepts in finance so they’re able to apply such principles outside of class to real-life situations.
    • Principle 1: Cash Flow Is What Matters
    • Principle 2: Money Has a Time Value
    • Principle 3: Risk Requires a Reward
    • Principle 4: Market Prices are Generally Right
    • Principle 5: Conflicts of Interest Can Cause Agency Problems
  • A focus on valuation. Although many professors and instructors make valuation the central theme of their course, students often lose sight of this focus when reading their text. Foundations of Finance makes this key theme prominent in its discussions and examples.
  • New - Streamlined presentation of chapter topics, such as the process used to evaluate a firm’s financial performance, or the discussion of cash management, makes it easier for students to review and retain the material.

Real-world context of corporate finance principles for students

  • Revised and Updated - Real-World Chapter-Opening Vignettes tell a story about a current, real-world company faced with a financial decision related to the chapter material, such as Disney’s decision to build the Shanghai Disney Resort. These vignettes have been carefully prepared to stimulate student interest and can be used as a lecture tool to provoke class discussion.
  • New and Updated - Examples using real individuals and companies such as Nike and eBay, encourage students to apply the concepts presented in each chapter.
  • Updated - Mini Cases help students apply chapter concepts to a realistic setting, thereby strengthening their understanding of the material. The 10th Edition now includes examination of the financial statements of retail giants, Walmart and Target, Wildhorse Resources, and many more.
  • New and Updated - Finance at Work describes corporate finance in action, covering the “green bonds” issued by Apple, stock quotes in the Wall Street Journal, and more.
  • Revised - Figures further illustrate concepts, such as the dramatic differences in capital structures used by firms in very different types of industries.
  • Cautionary Tales give students insights into how the core concepts of finance apply in the real world. Each one goes behind the headlines of finance pitfalls in the news to show how one of the five principles was forgotten or violated.
  • Ethics in Financial Management boxes show students that ethical behavior is doing the right thing and that ethical dilemmas are everywhere in finance.

Tools to help students check their understanding

  • Use of an integrated learning system. The text is organized around the learning objectives that appear at the beginning of each chapter to provide instructors and students with an easy-to-use integrated learning system. Numbered icons identifying each objective appear next to the related material throughout the text and in the summary, allowing easy location of material related to each objective.
  • Can You Do It? examples and Did You Get It? sections provide essential ingredients to the building-block approach to the material in this text.
  • Concept Check questions at the end of major chapter sections highlight key ideas presented in the section.
  • Financial Calculators throughout the text display solutions, especially with respect to the presentation of the time value of money and valuation.
  • Financial Decision Tools recap key equations shortly after their application in the chapter.
  • Updated - Key Terms list new terminology in the chapter and a brief definition of each.
  • Updated - Chapter Summaries recap for students the concepts, new terminology, and key equations that were presented in each learning objective.
  • New and Expanded - End-of-Chapter Study Problems, organized by learning objective, give students the opportunity for practice and help both instructors and learners readily align text and problem materials. Problems in the 10th Edition have been updated to reflect changes to the US tax code.
  • A Multi-Step Approach to Problem Solving and Analysis. Numbered chapter examples follow a very detailed and multi-step approach: 1) Formulate a Solution Strategy, 2) Crunch the Numbers, and 3) Analyze your Results, to problem solving that helps students develop their own problem-solving skills.
  • Brief (10 to 15 minute) lecture videos contain direct ‘tutoring’ from the authors that helps students with primary examples in the text. Available in the eText, students can replay these videos as many times as necessary.

A focus on developing students’ employability skills

  • Auto-graded Excel Projects give students the opportunity to practice important finance skills in Excel, helping them to master key concepts and gain proficiency with a program that’s the primary spreadsheet analysis and modeling tool used in business.
  • Remember Your Principles encourage students to take time out and reflect on the meaning of the concepts just presented. The use of these in-text inserts, coupled with the use of the five principles, keep students focused on the interrelationships and motivating factors behind the concepts. In effect, students learn the tools of analysis, but more importantly, develop an intuitive understanding of why and what they are doing in their analysis. By tying together the logic and fundamental principles that drive the field of finance, students are encouraged to develop their critical thinking skills and effectively deal with financial problems in an ever-changing financial environment.
  • Data Analysis Skills. Finance deals with decision making within the firm -- when to introduce a new product, make an investment, or how to value a financial asset like a bond or a share of common stock. Gaining an understanding of the decision-making process and the analytical tool set necessary to make those decisions reflects the core of finance and this text.

Reach every student with MyLab

  • Teach your course your way: Your course is unique. So whether you’d like to build your own assignments, teach multiple sections, or set prerequisites, MyLab gives you the flexibility to easily create your course to fit your needs.
    • New - Pearson eText is a simple-to-use, mobile-optimized, personalized reading experience available within MyLab. It lets students highlight, take notes, and review key vocabulary all in one place -- even when offline. Seamlessly integrated videos and other rich media engage students and give them access to the help they need, when they need it. Educators can easily share their own notes with students so they see the connection between their eText and what they learn in class.
  • Empower each learner: Each student learns at a different pace. Personalized learning pinpoints the precise areas where each student needs practice, giving all students the support they need -- when and where they need it -- to be successful.
    • Question Help consists of homework and practice questions to give students unlimited opportunities to master concepts. Learning aids walk students through the problem -- giving them assistance when they need it most.
    • The Study Plan gives students personalized recommendations, practice opportunities, and learning aids to help them stay on track.
  • Deliver trusted content: You deserve teaching materials that meet your own high standards for your course. That’s why we partner with highly respected authors to develop interactive content and course-specific resources that you can trust -- and that keep your students engaged.
    • Using proven, field-tested technology, auto-graded Excel Projects let you seamlessly integrate Microsoft® Excel® content into your course without having to manually grade spreadsheets.

 Table of Contents

PART I: THE SCOPE AND ENVIRONMENT OF FINANCIAL MANAGEMENT

1. An Introduction to the Foundations of Financial Management

2. The Financial Markets and Interest Rates

3. Understanding Financial Statements and Cash Flows

4. Evaluating a Firm’s Financial Performance

PART II: THE VALUATION OF FINANCIAL ASSETS

5. The Time Value of Money

6. The Meaning and Measurement of Risk and Return

7. The Valuation and Characteristics of Bonds

8. The Valuation and Characteristics of Stock

9. The Cost of Capital

PART III: INVESTMENT IN LONG-TERM ASSETS

10. Capital-Budgeting Techniques and Practice

11. Cash Flows and Other Topics in Capital Budgeting

PART IV: CAPITAL STRUCTURE AND DIVIDEND POLICY

12. Determining the Financing Mix

13. Dividend Policy and Internal Financing

PART V: WORKING-CAPITAL MANAGEMENT AND INTERNATIONAL BUSINESS FINANCE

14. Short-Term Financial Planning

15. Working-Capital Management

16. International Business Finance

17. Cash, Receivables, and Inventory Management


What resources are included in this purchase?


  • Instructor's Solutions Manual
  • Instructor's Manual Spreadsheet
  • Test Bank - Word & PDF


Random Sample of the Test Bank

Foundations of Finance, 10e (Keown/Martin/Petty)

Chapter 4    Evaluating a Firm's Financial Performance

 

Learning Objective 4.1

 

1) When the present financial ratios of a firm are compared with similar ratios for another firm in the same industry it is called trend analysis.

Answer:  FALSE

Diff: 1    Page Ref: 101

Keywords:  Financial Analysis, Bases of Comparison

Learning Obj.:  L.O. 4.1

AACSB:  Reflective Thinking

 

2) Theoretically, market values of assets are better for evaluating the creation of shareholder wealth than accounting numbers, but accounting numbers are used because they are more readily available.

Answer:  TRUE

Diff: 1    Page Ref: 100, 101

Keywords:   Shareholder Value, Market Value, Accounting Information

Learning Obj.:  L.O. 4.1

AACSB:  Reflective Thinking

 

3) Financial ratios are often reported by industry or line of business because differences in the type of business can make ratio comparisons uninformative or even misleading.

Answer:  TRUE

Diff: 1    Page Ref: 101

Keywords:  Ratio Analysis

Learning Obj.:  L.O. 4.1

AACSB:  Reflective Thinking

 

4) Financial ratios are useful for evaluating performance but should not be used for making financial projections.

Answer:  FALSE

Diff: 1    Page Ref: 101

Keywords:  Ratio Analysis, Financial Projections

Learning Obj.:  L.O. 4.1

AACSB:  Reflective Thinking

 

5) Financial ratios are used by managers inside the company and by lenders, credit-rating agencies, and investors outside of the company.

Answer:  TRUE

Diff: 1    Page Ref: 101-103

Keywords:  Ratio Analysis, Usefulness

Learning Obj.:  L.O. 4.1

AACSB:  Reflective Thinking

 


 

6) Financial ratios cannot be used to evaluate the creation of shareholder wealth because they are based on accounting numbers that reflect historical cost and not current market values.

Answer:  FALSE

Diff: 1    Page Ref: 100, 101

Keywords:  Ratio Analysis, Shareholder Wealth

Learning Obj.:  L.O. 4.1

AACSB:  Reflective Thinking

 

7) Common stockholders may use financial ratios to monitor manager actions to help lessen agency problems.

Answer:  TRUE

Diff: 1    Page Ref: 101

Keywords:  Agency Problems, Use of Ratio Analysis

Learning Obj.:  L.O. 4.1

AACSB:  Reflective Thinking

 

8) Accounting information is used in financial ratio analysis because it is theoretically the best data to guide financial decision-making.

Answer:  FALSE

Diff: 1    Page Ref: 100, 101

Keywords:  Ratio Analysis, Market Value, Historical Cost

Learning Obj.:  L.O. 4.1

AACSB:  Reflective Thinking

 

9) Ratios of almost all companies are easily comparable because all public companies prepare their financial reports based upon generally accepted accounting principles.

Answer:  FALSE

Diff: 1    Page Ref: 101

Keywords:  Ratio Comparability, GAAP

Learning Obj.:  L.O. 4.1

AACSB:  Reflective Thinking

 

10) Common-size balance sheets are balance sheets of companies with almost identical total assets (within 2% of each other).

Answer:  FALSE

Diff: 1    Page Ref: 101

Keywords:   Common-Sized Balance Sheet

Learning Obj.:  L.O. 4.1

AACSB:  Reflective Thinking

 

11) Financial ratios that are higher than industry averages may indicate problems that are as detrimental to the firm as ratios that are too low.

Answer:  TRUE

Diff: 1    Page Ref: 101, 102

Keywords:  Ratio Analysis, Interpretation of Ratios

Learning Obj.:  L.O. 4.1

AACSB:  Analytical Thinking

 

12) Ratios are used to standardize financial information, thereby making it easier to interpret.

Answer:  TRUE

Diff: 1    Page Ref: 101

Keywords:  Ratio Analysis

Learning Obj.:  L.O. 4.1

AACSB:  Reflective Thinking

 

13) A common method of evaluating a firm's financial ratios is to compare the current values of the firm's ratios to its own ratios from prior periods.

Answer:  TRUE

Diff: 1    Page Ref: 101

Keywords:  Financial Analysis, Ratio Analysis

Learning Obj.:  L.O. 4.2

AACSB:  Reflective Thinking

 

14) Financial analysis

A) uses historical financial statements and is thus useful only to assess past performance.

B) relies on generally accepted accounting principles to make comparisons between companies valid.

C) uses historical financial statements to measure a company's performance and in making financial projections of future performance.

D) is accounting record-keeping using generally accepted accounting principles.

Answer:  C

Diff: 1    Page Ref: 101

Keywords:  Financial Analysis, Financial Performance, Financial Projections

Learning Obj.:  L.O. 4.1

AACSB:  Reflective Thinking

 

15) Common-sized balance sheets

A) show data for companies in the same industry.

B) show data for companies with approximately the same amount of assets.

C) show each balance sheet account as a percentage of total sales.

D) show each balance sheet account as a percentage of total assets.

Answer:  D

Diff: 1    Page Ref: 101

Keywords:   Common-Sized Balance Sheet

Learning Obj.:  L.O. 4.1

AACSB:  Reflective Thinking

Test Bank and Instructor Resources for Foundations of Finance, 10th Edition

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