BFIN 300 Midterm Study Guide | Business Finance Review Notes & Practice
Questions 2026
Capital Budgeting - ANS ✔✔The identification of investing opportunities that are worth more to
the business today than they cost to acquire.
Capital Structure Process Decisions - ANS ✔✔Financing decisions, are we going to use l/t debt
vs s/t debt, are we going to use debt v equity, how much do we need to borrow? Cost of
borrowings, and how and where to raise the money. Decision of one financial structure over
another is at the heart
Working capital management - ANS ✔✔Managing short term assets and short term liabilities.
E.G. Checking account, cash coming in v. monthly payments. Ensures that the business has
sufficient cash or liquidity to run without interruption.
Forms of business - ANS ✔✔sole proprietorship, partnership, corporation
Sole Proprietorship - ANS ✔✔a business owned by one person. Simplest form of business there
is, owner takes all liability. (unlimited) E.G. Lawn mowing business
Partnership - ANS ✔✔similar to sole proprietorship, but you have two or more people.
General Partnership - ANS ✔✔partnership in which partners share equally in both responsibility
and liability
limited partnership - ANS ✔✔form of partnership where one or more partners are not active in
the daily running of the business, and whose liability for the partnership's debt is restricted to
the amount invested in the business
, Corporation - ANS ✔✔a business that is separate and distinct from its shareholders, considered
a legal person.
double taxation - ANS ✔✔taxation of dividends both as corporate profit and as personal income
Goals of Financial Management - ANS ✔✔maximize shareholder value. The goal is learning how
to identify investments and arrangements that positively affect share prices.
Corporate Finance - ANS ✔✔the study of the relationship between business decisions and
maximizing the value of the business
Sarbanes-Oxley Act - ANS ✔✔enacted by congress, requires each public company to provide an
assessment of their internal controls and their financial reporting. Requires independent auditor
to manage the assessment. Auditor must sign off on internal controls.
Agency Relationship - ANS ✔✔relationship between stockholders and management
proxy fight - ANS ✔✔an attempt by a person or group to gain control of a firm by getting it
stockholders to grant that person or group the authority to vote its shares to replace the current
management
Stakeholder - ANS ✔✔someone who potentially has a claim on the cash flows of a company.
Includes creditors, shareholders, employees, customers, suppliers, etc.
primary market - ANS ✔✔the market in which new securities are originally sold to investors
secondary market - ANS ✔✔the market in which previously issued securities are traded among
investors
Questions 2026
Capital Budgeting - ANS ✔✔The identification of investing opportunities that are worth more to
the business today than they cost to acquire.
Capital Structure Process Decisions - ANS ✔✔Financing decisions, are we going to use l/t debt
vs s/t debt, are we going to use debt v equity, how much do we need to borrow? Cost of
borrowings, and how and where to raise the money. Decision of one financial structure over
another is at the heart
Working capital management - ANS ✔✔Managing short term assets and short term liabilities.
E.G. Checking account, cash coming in v. monthly payments. Ensures that the business has
sufficient cash or liquidity to run without interruption.
Forms of business - ANS ✔✔sole proprietorship, partnership, corporation
Sole Proprietorship - ANS ✔✔a business owned by one person. Simplest form of business there
is, owner takes all liability. (unlimited) E.G. Lawn mowing business
Partnership - ANS ✔✔similar to sole proprietorship, but you have two or more people.
General Partnership - ANS ✔✔partnership in which partners share equally in both responsibility
and liability
limited partnership - ANS ✔✔form of partnership where one or more partners are not active in
the daily running of the business, and whose liability for the partnership's debt is restricted to
the amount invested in the business
, Corporation - ANS ✔✔a business that is separate and distinct from its shareholders, considered
a legal person.
double taxation - ANS ✔✔taxation of dividends both as corporate profit and as personal income
Goals of Financial Management - ANS ✔✔maximize shareholder value. The goal is learning how
to identify investments and arrangements that positively affect share prices.
Corporate Finance - ANS ✔✔the study of the relationship between business decisions and
maximizing the value of the business
Sarbanes-Oxley Act - ANS ✔✔enacted by congress, requires each public company to provide an
assessment of their internal controls and their financial reporting. Requires independent auditor
to manage the assessment. Auditor must sign off on internal controls.
Agency Relationship - ANS ✔✔relationship between stockholders and management
proxy fight - ANS ✔✔an attempt by a person or group to gain control of a firm by getting it
stockholders to grant that person or group the authority to vote its shares to replace the current
management
Stakeholder - ANS ✔✔someone who potentially has a claim on the cash flows of a company.
Includes creditors, shareholders, employees, customers, suppliers, etc.
primary market - ANS ✔✔the market in which new securities are originally sold to investors
secondary market - ANS ✔✔the market in which previously issued securities are traded among
investors
