26 Aug 1, Why does a balance sheet have to balance? 2. How does the

1, Why does a balance sheet have to balance? 2. How does the accrual method effect cash flows on the income statement? 3. How can depreciation on the income statement be a non-cash source of funds? 4. What does each type of financial ratio show and why is each type important? 5. What is the relationship between operating leverage and financial leverage? Can a company have both?6. What is the relationship between interest rates and future values,i.e., as interest rates go up, what direction do future values go and as interest rates go down, what direction do future values go? Explain your answers.7. What is the relationship between interest rates and stock values based on the dividend valuation model in your text?8. What is the relationship between interest rates and bond values based on the bond valuation model from your test?9. For an individual project do all capital budgeting techniques that have definate accept reject criteria agree or disagree? Explain your answer. 10. What are capital markets and what role do they play in helping companies raise money for investment? 11. What types of securities are bought and sold in capital markets? 12. What long term debt instruments do corporations use? 14. How can leasing be a type of long term financing? 15. What are the differences between financing with common stock and preferred stock?