Mindanao State University
General Santos City
College of Business Administration
Department of Accountancy
ACT171 – Financial Markets
Summer Term – Academic Year 2022-2023
Seatwork # 1
Instruction: Answer each question below based on the knowledge you acquired from the
program through your readings and sessions. No submission is required; however,
each question will be discussed after the time allotted for this activity.
1. Assume you are the financial officer of a major firm. The president of the firm has just stated
that she wishes to reduce the firm's investment in current assets since those assets provide
little, if any, return to the firm. How would you respond to this statement?
2. As long as a firm maintains a positive cash balance, why is it essential to review the firm's cash
flows?
3. The managers of a firm wish to expand the firm's operations and are trying to determine the
amount of debt financing the firm should obtain versus the amount of equity financing that
should be raised. The managers have asked you to explain the effects that both of these forms
of financing would have on the cash flows of the firm. Write a short response to this request.