Consider the statement in the textbook that the goal of financial management is to maximize the market value of ownersâ equity (or equivalently in the case of public companies: maximize the current per share value of existing stock). Do you think such a goal underserves other stakeholders in the firm, such as customers, employees, and the community?
Consider the statement in the textbook that the goal of financial management is to maximize the market value of ownersâ equity (or equivalently in the case of public companies: maximize the current per share value of existing stock). Do you think such a goal underserves other stakeholders in the firm, such as customers, employees, and the community?
Related questions
Some recent financial statements for Smolira Golf, Inc.,follow.
| SMOLIRA GOLF, INC. Balance Sheets as of December 31, 2015 and 2016 | ||||||||||||||||
| 2015 | 2016 | 2015 | 2016 | |||||||||||||
| Assets | Liabilities and Ownersâ Equity | |||||||||||||||
| Current assets | Current liabilities | |||||||||||||||
| Cash | $ | 3,181 | $ | 3,257 | Accounts payable | $ | 2,158 | $ | 2,610 | |||||||
| Accounts receivable | 4,762 | 5,771 | Notes payable | 1,755 | 2,126 | |||||||||||
| Inventory | 12,498 | 13,772 | Other | 91 | 108 | |||||||||||
| Total | $ | 20,441 | $ | 22,800 | Total | $ | 4,004 | $ | 4,844 | |||||||
| Long-term debt | $ | 13,300 | $ | 16,060 | ||||||||||||
| Ownersâ equity | ||||||||||||||||
| Common stock and paid-in surplus | $ | 38,500 | $ | 38,500 | ||||||||||||
| Fixed assets | Accumulated retained earnings | 15,659 | 39,185 | |||||||||||||
| Net plant and equipment | $ | 51,022 | $ | 75,789 | Total | $ | 54,159 | $ | 77,685 | |||||||
| Total assets | $ | 71,463 | $ | 98,589 | Total liabilities and ownersâ equity | $ | 71,463 | $ | 98,589 | |||||||
| SMOLIRA GOLF, INC. 2016 Income Statement | |||||
| Sales | $ | 187,570 | |||
| Cost of goods sold | 126,303 | ||||
| Depreciation | 5,323 | ||||
| EBIT | $ | 55,944 | |||
| Interest paid | 1,420 | ||||
| Taxable income | $ | 54,524 | |||
| Taxes | 19,083 | ||||
| Net income | $ | 35,441 | |||
| Dividends | $ | 11,915 | |||
| Retained earnings | 23,526 | ||||
Smolira Golf has 11,000 shares of common stock outstanding, andthe market price for a share of stock at the end of 2016 was$78.
What is the priceâearnings ratio? (Do not roundintermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.)
Priceâearnings ratio times
What is the priceâsales ratio? (Do not round intermediatecalculations and round your answer to 2 decimal places, e.g.,32.16.)
Priceâsales ratio times
What are the dividends per share? (Do not roundintermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.)
Dividends per share $
What is the market-to-book ratio at the end of 2016? (Donot round intermediate calculations and round your answer to 2decimal places, e.g., 32.16.)
Market-to-book ratio times
