AFM 373- Midterm Exam Guide - Comprehensive Notes for the exam ( 43 pages long!)

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM373
• Professor: Alan Douglas

Document Summary

Underinvestment problem debt-finance companies, when faced with a drop in operating cash flows, are more likely to pass up positive-npv projects than firms financed mainly with equity. Marriott, sr. in 1927, is the 12th largest employer in the united states with over 202,000 employees. Marriott corporation started as a root beer stand, then expanded into food industry as a restaurant franchise. It did not expand into hotel business until 1956. Marriot sr. passed on the presidency to his son, j. w. U(cid:374)de(cid:396) the so(cid:374)"s leade(cid:396)ship, the (cid:272)o(cid:396)po(cid:396)atio(cid:374) st(cid:396)a(cid:455)ed a(cid:449)a(cid:455) f(cid:396)o(cid:373) its (cid:272)o(cid:374)se(cid:396)(cid:448)ati(cid:448)e fi(cid:374)a(cid:374)(cid:272)ial policies and adopted aggressive and risk investment strategies, such as bank credit and unsecured debt, in order to maintain its historical 20% annual revenue growth rate. Marriott corporation entered into its first joint venture, constructing a group of hotels and then selling it to a major insurance company called equitable life assurance society.