INTRO TO BUSINESS FINANCE (D775 WGU)
1. Accounting Records, reports, and analyzes past financial transactions.
Produces balance sheets, income statements, cash flow statements, etc.
Primarily historic data
2. Finance Manages assets and liabilities, plans for growth, manages risks, raises
capital, and budgets
Use data to make strategic, future-oriented decisions
3. Finance vs. Accounting provides accurare, historical data; finance uses that data for
Ac- couting
strategic future planning
4. Personal Finance Individual/household finances (budgeting, saving, investing,
retirement)
5. Public Finance Government financial management (tax collection, spending, debt
issuance)
6. Business Finance Manages a company's financial activities (capital investment,
financing, risk man- agement)
7. 3 Roles of 1. Use financial ratios to manage the business
Busi- ness
2. Apply time value of money to determine investment-worthy
Finance
projects Control risk by computing cost of capital, to choose
funding methods
8. Purpose of Finan- Provide a snapshot of company performance and eflciency
cial Statements
9. Balance Sheet Shows financial position at a specific point in time
(Assets = Liabilities + Shareholders' Equity)
10. Assets All resources with economic value (cash, receivables, inventory, property,
equip- ment)
11. Liabilities What a company owes
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23
,INTRO TO BUSINESS FINANCE (D775 WGU)
-Current liabilites = due within 1 year (electric bill)
-long-term liabilities = due after one year (mortgage)
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, INTRO TO BUSINESS FINANCE (D775 WGU)
12. Shareholder Owners claim after liabilities are paid (i.e. retained earnings)
s' Equity
13. Income
Measures performance over a period
State- ment
14. Revenue Income from normal operations
15. 4 Types of 1. COGS (direct production costs)
Ex- penses
2. SG&A (selling, general, and administrative expenses)
3. R&D (research and development)
4. Depreciation (non-cash expense reducing asset value)
16. Net Income Final profit after all costs, interest, and taxes
17. Debt Financing Take out a loan or sell bonds to finance a project (interest is paid before
taxes).
Raises funds without ownership dilution but adds repayment obligation
18. Equity Financing Selling ownership shares (company stocks) to finance projects
Raises funds without debt but dilutes ownership
19. Stocks Certificates representing ownership in a company
20. Common Stock Most popular. shareholders have voting rights and may receive
dividends, capital appreciation (increase in value over time --> sell it
for more than you bought it)
21. Capital An increase in the market price of shares (sell for more than you paid
Apprecia- tion for it)
22. Preffered Stock Ownership like common stock but fixed dividends like bonds.
Safer than common stocks but lower returns
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1. Accounting Records, reports, and analyzes past financial transactions.
Produces balance sheets, income statements, cash flow statements, etc.
Primarily historic data
2. Finance Manages assets and liabilities, plans for growth, manages risks, raises
capital, and budgets
Use data to make strategic, future-oriented decisions
3. Finance vs. Accounting provides accurare, historical data; finance uses that data for
Ac- couting
strategic future planning
4. Personal Finance Individual/household finances (budgeting, saving, investing,
retirement)
5. Public Finance Government financial management (tax collection, spending, debt
issuance)
6. Business Finance Manages a company's financial activities (capital investment,
financing, risk man- agement)
7. 3 Roles of 1. Use financial ratios to manage the business
Busi- ness
2. Apply time value of money to determine investment-worthy
Finance
projects Control risk by computing cost of capital, to choose
funding methods
8. Purpose of Finan- Provide a snapshot of company performance and eflciency
cial Statements
9. Balance Sheet Shows financial position at a specific point in time
(Assets = Liabilities + Shareholders' Equity)
10. Assets All resources with economic value (cash, receivables, inventory, property,
equip- ment)
11. Liabilities What a company owes
1/
23
,INTRO TO BUSINESS FINANCE (D775 WGU)
-Current liabilites = due within 1 year (electric bill)
-long-term liabilities = due after one year (mortgage)
2/
23
, INTRO TO BUSINESS FINANCE (D775 WGU)
12. Shareholder Owners claim after liabilities are paid (i.e. retained earnings)
s' Equity
13. Income
Measures performance over a period
State- ment
14. Revenue Income from normal operations
15. 4 Types of 1. COGS (direct production costs)
Ex- penses
2. SG&A (selling, general, and administrative expenses)
3. R&D (research and development)
4. Depreciation (non-cash expense reducing asset value)
16. Net Income Final profit after all costs, interest, and taxes
17. Debt Financing Take out a loan or sell bonds to finance a project (interest is paid before
taxes).
Raises funds without ownership dilution but adds repayment obligation
18. Equity Financing Selling ownership shares (company stocks) to finance projects
Raises funds without debt but dilutes ownership
19. Stocks Certificates representing ownership in a company
20. Common Stock Most popular. shareholders have voting rights and may receive
dividends, capital appreciation (increase in value over time --> sell it
for more than you bought it)
21. Capital An increase in the market price of shares (sell for more than you paid
Apprecia- tion for it)
22. Preffered Stock Ownership like common stock but fixed dividends like bonds.
Safer than common stocks but lower returns
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