Busi 408 Midterm Review
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valuable to a firm even though liquid assets tend to be less profitable to own
Balance sheet accounts are listed in order of decreasing liquidity
Assets are listed on the balance sheet in order of decreasing liquidity
Choose an answer
1 Working Capital Management 2 Liquidity
3 Earnings per share 4 Profits vs. Cash flows
Don't know?
Terms in this set (78)
, Busi 408 Midterm Review
A firm starts the year with positive NWC, but during the year it acquires
... more short-term debt than short-term assets. So ending NWC can = +,-
or 0.
Maximize the current value of the existing stock
#1 goal of financial management
Increase the market value of existing owners' equity
Think salvage value.
After-tax cash flow
= salvage value of fixed assets * (1 - tax rate)
Should include:
- opportunity costs
- erosion costs
Analysis of a project - incremental costs
Should NOT include
- sunk costs
= effective annual rate when the reate on an account is designated as
Annual Percentage Rate
simple interest.
, Busi 408 Midterm Review
Credit card company charges 1.5% per month
Annual percentage rate:
APR = 0.015 * 12
APR = 18%
Annual percentage rate
Currently paying EAR of 13.8% with interest compounded monthly.
Calculate APR
EAR =
an annual allowance or income; the annual interest payment on an
Annuity
investment; any regular allowance or income
Annuity stream of cash flow A set of level cash flows occurring each time period for a fixed length of
payments time
shows a firm's accounting value on a particular date
Assets = Liabilities + Stockholders' Equity
Balance sheet
Common-size balance sheet: all liability accounts are shown as a
percentage of total assets
Based on historical cost
Book value
Primarily used to compute the amount of tax due on the sale of an asset
Learn 1 /7 Study using Learn
valuable to a firm even though liquid assets tend to be less profitable to own
Balance sheet accounts are listed in order of decreasing liquidity
Assets are listed on the balance sheet in order of decreasing liquidity
Choose an answer
1 Working Capital Management 2 Liquidity
3 Earnings per share 4 Profits vs. Cash flows
Don't know?
Terms in this set (78)
, Busi 408 Midterm Review
A firm starts the year with positive NWC, but during the year it acquires
... more short-term debt than short-term assets. So ending NWC can = +,-
or 0.
Maximize the current value of the existing stock
#1 goal of financial management
Increase the market value of existing owners' equity
Think salvage value.
After-tax cash flow
= salvage value of fixed assets * (1 - tax rate)
Should include:
- opportunity costs
- erosion costs
Analysis of a project - incremental costs
Should NOT include
- sunk costs
= effective annual rate when the reate on an account is designated as
Annual Percentage Rate
simple interest.
, Busi 408 Midterm Review
Credit card company charges 1.5% per month
Annual percentage rate:
APR = 0.015 * 12
APR = 18%
Annual percentage rate
Currently paying EAR of 13.8% with interest compounded monthly.
Calculate APR
EAR =
an annual allowance or income; the annual interest payment on an
Annuity
investment; any regular allowance or income
Annuity stream of cash flow A set of level cash flows occurring each time period for a fixed length of
payments time
shows a firm's accounting value on a particular date
Assets = Liabilities + Stockholders' Equity
Balance sheet
Common-size balance sheet: all liability accounts are shown as a
percentage of total assets
Based on historical cost
Book value
Primarily used to compute the amount of tax due on the sale of an asset
