1. What conflicts of interest can arise between managers and stockholders?

➢ When managers put their interests or short-term gains ahead of the

company's long-term value, possibly at the price of stockholder returns,
conflicts of interest between them and the investors may occur.
Furthermore, conflicts may arise from exorbitant executive compensation
packages that are out of proportion to the company's performance, as
managers may profit disproportionately even during periods of low
stockholder performance. Finally, managers' motivation for job security or
personal gain may override their goal to maximize shareholder value when
making strategic decisions like mergers or acquisitions.

2. State the kinds of assurances that investors and creditors seek from a firm.
➢ To guarantee the company's financial success and well-being, creditors
and investors look for financial assurances from a company, including
accurate and transparent financial reporting. They also seek information
on prospective hazards and how they are being mitigated, as well as
assurances about the company's risk management procedures.
Furthermore, guarantees about the company's compliance with legal and
ethical requirements as well as its dedication to corporate governance
principles play a significant role in determining the level of trust that
creditors and investors have in the business.

3. What environmental considerations prevent the firm from achieving the best
results in terms of cost control and profitability? Explain what this means.
➢ Environmental factors, such as strict environmental restrictions, can
cause a company to incur additional expenditures, which can hinder its
capacity to achieve the best possible cost control and profitability.
Adopting pricey eco-friendly technologies or making costly adjustments to
production processes may be necessary to comply with these rules.
Furthermore, supply chains may be disrupted by a lack of natural
resources or environmental degradation, which could result in higher
expenses and inefficient operations. Bad environmental practices can also
have a negative reputational impact on businesses by eroding consumer
loyalty and trust, which can affect revenue and profitability. Lastly,
investments in sustainable practices may be necessary to meet the
changing expectations of environmentally sensitive consumers. These
investments may have an impact on short-term expenses but may also
improve long-term competitiveness.

4. What goal should always motivate the action of a firm's financial manager?
 ➢ Maximizing shareholder wealth should always be the top priority for a
company's financial manager. This entails making choices that raise the
company's worth and, as a result, the wealth of its owners. To increase the
company's long-term value for its shareholders, financial managers should
maximize resource allocation, make wise investment decisions, and
manage risks.

5. What is the difference in perspective between finance and accounting?

➢ Within a company, accounting and finance have different viewpoints.
Accounting is the study of documenting, categorizing, and summarizing
financial transactions to create financial statements that show the
success of a business over time. Finance, on the other hand, looks ahead
and prioritizes using accounting's financial data to inform decisions about
capital structure, resource allocation, and investment strategies that
maximize shareholder wealth. Accounting is focused on accurately
representing financial data, but finance is more interested in leveraging
that data to guide strategic decisions that will determine the firm's future
success.