FINC 3610 Dismukes 2025 – Complete
Course & Exam Study Guide
Corporate finance focuses on 3 questions: - ANSWER ✨✔---1. Capital Budgeting-What should we
invest in?
2. Capital Structure-How do we finance those investments?
3. Working Capital Management-How do we manage the day-to-day operations of the firm?
Capital Budgeting - ANSWER ✨✔---The process of planning and managing the firm's long-term
investments.
Capital Structure - ANSWER ✨✔---The mix of debt and equity describing how the firm is financed.
Debt and Equity as Contingent Claims - ANSWER ✨✔----DEBT is a promise to pay. EQUITY gets
everything else.
CORPORATION IS IN $100 DEBT :
- If firms asset is $75, debt holders get $75 , stockholder gets $0.
, -If firms asset is $200, debt holders get $100 and stockholders get $100.
What does short-term cash flow management entail? - ANSWER ✨✔----Net working capital
-Cash Management
-Credit Management
Forms of Business Organization - ANSWER ✨✔---1. Sole Proprietorship
2. Partnership
3. Corporation
Sole Proprietorship - ANSWER ✨✔---A business owned by one person.
•Pros
-Easy startup.
-Taxed as personal income.
•Cons
-Unlimited liability.
-Life limited to that of owner.
-Equity limited to owner's wealth.
Difficulty in transwerferring ownership
Partnership - ANSWER ✨✔---•General (actively involved) vs. Limited Partners(limited liability)
•Pros
-Easy startup.
-Taxed as personal income.
•Cons
-Unlimited liability.
Course & Exam Study Guide
Corporate finance focuses on 3 questions: - ANSWER ✨✔---1. Capital Budgeting-What should we
invest in?
2. Capital Structure-How do we finance those investments?
3. Working Capital Management-How do we manage the day-to-day operations of the firm?
Capital Budgeting - ANSWER ✨✔---The process of planning and managing the firm's long-term
investments.
Capital Structure - ANSWER ✨✔---The mix of debt and equity describing how the firm is financed.
Debt and Equity as Contingent Claims - ANSWER ✨✔----DEBT is a promise to pay. EQUITY gets
everything else.
CORPORATION IS IN $100 DEBT :
- If firms asset is $75, debt holders get $75 , stockholder gets $0.
, -If firms asset is $200, debt holders get $100 and stockholders get $100.
What does short-term cash flow management entail? - ANSWER ✨✔----Net working capital
-Cash Management
-Credit Management
Forms of Business Organization - ANSWER ✨✔---1. Sole Proprietorship
2. Partnership
3. Corporation
Sole Proprietorship - ANSWER ✨✔---A business owned by one person.
•Pros
-Easy startup.
-Taxed as personal income.
•Cons
-Unlimited liability.
-Life limited to that of owner.
-Equity limited to owner's wealth.
Difficulty in transwerferring ownership
Partnership - ANSWER ✨✔---•General (actively involved) vs. Limited Partners(limited liability)
•Pros
-Easy startup.
-Taxed as personal income.
•Cons
-Unlimited liability.
