ASU FIN 300 EXAM 1
(CH 1-4)
[Document subtitle]
,ASU FIN 300 Exam 1 (Ch 1-4)
Three areas of finance: - Answer: 1. *Financial Management*
-buying/selling of assets
-financing choices
-control costs
2. *Investments*
-purchasing and holding assets & securities
-stocks and bonds
3. *Financial Markets*
-capital markets
-money markets
-financial intermediaries (banks or credit unions)
Productive assets - Answer: the long-term tangible and intangible *assets* a firm uses *to
generate cash flows*
Tangible = equipment etc.
intangible = patents, trademarks, technical experience
when purchase productive assets = *capital budgeting*
Financial Managers should make decisions that maximize - Answer: the *value of the owner's
stock*
which helps maximize the *owner's wealth* (the economic value of the assets the owners
possesses)
, ASU FIN 300 Exam 1 (Ch 1-4)
Stakeholder - Answer: anyone other than the owner (stockholder) with a claim on the cash
flows of a firm (employees, customers, creditors, suppliers, the government)
3 fundamental decisions in financial management - Answer: a. *Capital budgeting*- which
productive assets to buy
b. *Financing decisions*- raising money to buy more p assets, mainly through selling long term
*debt and equity*
c. *Working capital* decisions- involve how firms *manage their current assets and liabilities*.
Enough money to *pay the bills* and any money left over is invested to earn a return
Capital Budgeting - Answer: *which productive assets* the firm *should purchase* and how
much money the firm can afford to spend
*long term assets* on balance sheets/investments/ productive assets both tangible and
intangible
Financing decisions - Answer: how firms raise cash to pay for their iterm-55nvestments
ex: productive assets financed by long term borrowing or equity investment
debt financing - advantage=tax deductable
but increase firms risk because contractual obligation to make interest payments
equity- has no maturity/guarantee of payments.
*long term liability (debt) and equity*
(CH 1-4)
[Document subtitle]
,ASU FIN 300 Exam 1 (Ch 1-4)
Three areas of finance: - Answer: 1. *Financial Management*
-buying/selling of assets
-financing choices
-control costs
2. *Investments*
-purchasing and holding assets & securities
-stocks and bonds
3. *Financial Markets*
-capital markets
-money markets
-financial intermediaries (banks or credit unions)
Productive assets - Answer: the long-term tangible and intangible *assets* a firm uses *to
generate cash flows*
Tangible = equipment etc.
intangible = patents, trademarks, technical experience
when purchase productive assets = *capital budgeting*
Financial Managers should make decisions that maximize - Answer: the *value of the owner's
stock*
which helps maximize the *owner's wealth* (the economic value of the assets the owners
possesses)
, ASU FIN 300 Exam 1 (Ch 1-4)
Stakeholder - Answer: anyone other than the owner (stockholder) with a claim on the cash
flows of a firm (employees, customers, creditors, suppliers, the government)
3 fundamental decisions in financial management - Answer: a. *Capital budgeting*- which
productive assets to buy
b. *Financing decisions*- raising money to buy more p assets, mainly through selling long term
*debt and equity*
c. *Working capital* decisions- involve how firms *manage their current assets and liabilities*.
Enough money to *pay the bills* and any money left over is invested to earn a return
Capital Budgeting - Answer: *which productive assets* the firm *should purchase* and how
much money the firm can afford to spend
*long term assets* on balance sheets/investments/ productive assets both tangible and
intangible
Financing decisions - Answer: how firms raise cash to pay for their iterm-55nvestments
ex: productive assets financed by long term borrowing or equity investment
debt financing - advantage=tax deductable
but increase firms risk because contractual obligation to make interest payments
equity- has no maturity/guarantee of payments.
*long term liability (debt) and equity*
