WWU FIN 341 – FINAL STUDY GUIDE
Capital Budgeting - Answers -= process of planning and managing a firm's long-term
investments (worth more to firm than they cost)
"WHAT long-term investments should you take on?"
Capital Structure - Answers -= the mixture of debt and equity maintained by a firm to
finance its operations
"WHERE will the long-term financing come from?"
-->Debt (bonds) or Equity (sell stock)?
Working Capital Management - Answers -= firm's short-term assets and liabilities
"HOW will you manage your everyday financial activities?"
-->paying suppliers, collecting $$ from customers
Goal of a Financial Manager - Answers -= maximize the value per share (equity) of the
company's existing stocks
-->makes decisions for the stockholders
Sole Proprietor - Answers --1 person/couple = the business
-unlimited liability for ^^
-capital limited to wealth of the owner
- taxed once
*most # of these
Partnership - Answers --2 or more separate owners
-limited liability (one person can have more liability than the other, not just on 1 person)
-split liability, profits and loses
-taxed once
Corporation - Answers --limited liability (owner separate from biz)
-unlimited life
-DOUBLE TAXED
*most important
LLC - Answers -= Limited Liability Company
-same as corporation, but only taxed once
Net Working Capital - Answers -= current assets - current liabilities
, -healthy when positive # (when cash that will be received over the next 12 months >
cash to be paid out)
* DOES NOT include LONG-TERM
Cash Flow Identity - Answers -Cash flow from Assets = Cash flow to Creditors + Cash
flow to Stockholders
CFA = CFC + CFSH
Cash Flow from Assests - Answers -= Op. cash flow - Net cap. Spending - Change in
NWC
Operating Cash Flow - Answers -= EBIT + Deprec. -Taxes
Net Capital Spending - Answers -= End NFA - Beg. NFA + Deprec.
Change in NWC - Answers -= End NWC - Beg. NWC
Cash Flow to Creditors - Answers -= Interest Paid - Net New Borrowing
Cash Flow to Stockholders - Answers -= Dividends Paid - Net New Equity Raised
Standardized Balance Sheet - Answers -Express each item as a %age of TOTAL
ASSETS
Standardized Income Statement - Answers -Express each item as a % of SALES
Types of Standardized Financial Statements - Answers -1. Common Size
--->
2. Base Year
---> (chose base year to compare current/future)
3. Combined (most accurate)
---> (2014% / 2015%)
Sources of Cash - Answers -= RECEIVE cash
- DECREASE assets
and/or
- INCREASE liability/equity (acct. payable, current liab., LTD, shareholder equity)
Uses of Cash - Answers -= SPEND cash
- INCREASE assets
and/or
Capital Budgeting - Answers -= process of planning and managing a firm's long-term
investments (worth more to firm than they cost)
"WHAT long-term investments should you take on?"
Capital Structure - Answers -= the mixture of debt and equity maintained by a firm to
finance its operations
"WHERE will the long-term financing come from?"
-->Debt (bonds) or Equity (sell stock)?
Working Capital Management - Answers -= firm's short-term assets and liabilities
"HOW will you manage your everyday financial activities?"
-->paying suppliers, collecting $$ from customers
Goal of a Financial Manager - Answers -= maximize the value per share (equity) of the
company's existing stocks
-->makes decisions for the stockholders
Sole Proprietor - Answers --1 person/couple = the business
-unlimited liability for ^^
-capital limited to wealth of the owner
- taxed once
*most # of these
Partnership - Answers --2 or more separate owners
-limited liability (one person can have more liability than the other, not just on 1 person)
-split liability, profits and loses
-taxed once
Corporation - Answers --limited liability (owner separate from biz)
-unlimited life
-DOUBLE TAXED
*most important
LLC - Answers -= Limited Liability Company
-same as corporation, but only taxed once
Net Working Capital - Answers -= current assets - current liabilities
, -healthy when positive # (when cash that will be received over the next 12 months >
cash to be paid out)
* DOES NOT include LONG-TERM
Cash Flow Identity - Answers -Cash flow from Assets = Cash flow to Creditors + Cash
flow to Stockholders
CFA = CFC + CFSH
Cash Flow from Assests - Answers -= Op. cash flow - Net cap. Spending - Change in
NWC
Operating Cash Flow - Answers -= EBIT + Deprec. -Taxes
Net Capital Spending - Answers -= End NFA - Beg. NFA + Deprec.
Change in NWC - Answers -= End NWC - Beg. NWC
Cash Flow to Creditors - Answers -= Interest Paid - Net New Borrowing
Cash Flow to Stockholders - Answers -= Dividends Paid - Net New Equity Raised
Standardized Balance Sheet - Answers -Express each item as a %age of TOTAL
ASSETS
Standardized Income Statement - Answers -Express each item as a % of SALES
Types of Standardized Financial Statements - Answers -1. Common Size
--->
2. Base Year
---> (chose base year to compare current/future)
3. Combined (most accurate)
---> (2014% / 2015%)
Sources of Cash - Answers -= RECEIVE cash
- DECREASE assets
and/or
- INCREASE liability/equity (acct. payable, current liab., LTD, shareholder equity)
Uses of Cash - Answers -= SPEND cash
- INCREASE assets
and/or
