1. Describe why a manager needs to understand the characteristics and importance of financial markets including risk and efficiency. 2. Describe why cash flows are more important than sales in a business 3. Discuss what could happen if management does not fulfill its financial responsibilities related to the business--dig deeper than just the business will fail. Find an article that highlights a real life example of management making poor financial decisions that affected the business. Solution 1. A manager needs to understand the characteristics and importance of financial markets including risk and efficiency because risk is inseperable from performance. Understanding risk is one of the most important parts of a financial education. We always expect a higher rate of return even if we invest in risky ventures. The investments have a low and negative value in economy and it sometimes creates uncertainity in the financial market. Therefore manager should have understanding about financial markets including risk and efficiency. 2. Csh flows are more important than sales. It gives a picture of the transactions to be classified into Operating Expenses , Investing Activities and Financing Activities. It maintains Company\'s Financial Stability. 3. Management has to fulfill the financial responsibilities related to business for its smooth operations. An example could be when a person starts his new business without inter pretting financial forecast. This would sometimes lead into short run profits and then not work out in long run profits. Thus resulting in decrease of cash flows which will in turn affect business.

1. 1. Describe why a manager needs to understand the characteristics and importance of financial
markets including risk and efficiency.
2. Describe why cash flows are more important than sales in a business
3. Discuss what could happen if management does not fulfill its financial responsibilities related
to the business--dig deeper than just the business will fail. Find an article that highlights a real
life example of management making poor financial decisions that affected the business.
Solution
1. A manager needs to understand the characteristics and importance of financial markets
including risk and efficiency because risk is inseperable from performance. Understanding risk is
one of the most important parts of a financial education. We always expect a higher rate of return
even if we invest in risky ventures. The investments have a low and negative value in economy
and it sometimes creates uncertainity in the financial market. Therefore manager should have
understanding about financial markets including risk and efficiency.
2. Csh flows are more important than sales. It gives a picture of the transactions to be classified
into Operating Expenses , Investing Activities and Financing Activities. It maintains Company's
Financial Stability.
3. Management has to fulfill the financial responsibilities related to business for its smooth
operations. An example could be when a person starts his new business without inter pretting
financial forecast. This would sometimes lead into short run profits and then not work out in long
run profits. Thus resulting in decrease of cash flows which will in turn affect business