Kanya Geraldine

201900211

FINC232 Business Finance

Assignment 1

4. a) A share of stock = Financial

b) A personal IOU = Real assets

c) A trademark = Real assets

d) A truck = Real assets

e) Undeveloped land = Real assets

f) The balance in the firm’s checking account = Financial

g) An experienced and hardworking sales force = Real assets

h) A bank loan agreement = Financial

7. Double taxation occurs when a corporation's income is first taxed at the corporate tax rate, and then
taxed again when the revenue is transferred to shareholders as dividends at the shareholder's personal
tax rate.

16. The value of present and future dividends expected by shareholders is reflected in the stock price.
Profits, on the other hand, solely represent the current year's performance. Profit maximizers may
attempt to increase profits this year at the expense of future gains. Stock price maximizers, on the other
hand, will consider the complete stream of cash flows that the company can generate.

31. A clear and comprehensive financial report will allow the corporate governance to easily analyse the
report fundamentally. Quality financial report allows for effective and informative fundamental analysis.

37. There are many companies in the industry of fashion and leather goods that considered
environmentally unfriendly because their activities thought to be related to the extinction of rare
animals. In luxury fashion, product such as bags, shoes, and coat that use leather material are usually
using real leather from animal skin. Even though it was confirmed that some companies such as Hermes
own their own farm to breed specific animal species to use the skin, the governor can accuse Hermes by
bringing charges for large-scale killing of protected animals. Moreover, killing animals on a large scale
can cause the balance of nature. It sounds very unethical because Hermes killing more animals as the
demands for bag goes up every year.