Guides d'étude, Notes de cours & Résumés

What is a sole proprietorship? - ANSWER-Relatively easy to set up and well suited for small businesses. No distinction between owner and manager which means unlimited liability What is a partnership? - ANSWER-Share obligations and profits among partners. Still at risk for unlimited liability. What is a corporation? - ANSWER-Separate legal entity from owners (shareholders) who elect a board of directors. Board of directors then appoint a manager, Owners have limited liability. Separati...

Shareholders' equity: - ANSWER-Represents the residual value of a firm. Which one of the following terms is defined as the management of a firm's long-term investments? - ANSWER-Capital budgeting. Lenders probably have the most interest in which one of the following sets of ratios? - ANSWER-Long-term debt and times interest earned. Which one of the following is included in a firm's market value but yet is excluded from the firm's accounting value? - ANSWER-Good reputation of the com...

Five Key Principals of Capital Budgeting - ANSWER-1) Decisions are based on incremental cash flows. Sunk costs are not considered. 2) Cash flows are based on opportunity cost 3) Timing of the cash flows is important 4) Cash flows are analyzed on an after-tax basis 5) Financing costs are reflected in the required rate of return, not in the incremental cash flows Payback Period - ANSWER-Number of years it takes to recover the initial cost of the project. Ignores time value of money and any ...

net working capital - ANSWER-current assets - current liabilities marginal tax rate - ANSWER-tax rate for the next dollar that we make effective tax rate - ANSWER-total tax/net profit before taxes. shows the overall tax rate market value - ANSWER-the value of the firm or other asset on the open market today book value - ANSWER-the historical value of the firms assets, or what the firm paid, minus depreciation common sized financial statements - ANSWER-financial statements expresse...

sole proprietorship - ANSWER-1 owner, owner receives all the profits, unlimited liab., 2 parts: 1. initial investment and 2. personal wealth. Taxed based on personal income. Transfer of ownership is hard. Must be willing to buy all assets. partnership - ANSWER-2 or more owners. profit is based on % invested shared. Unlimited liab. between owners. Tax based on personal income. hard to transfer ownership. limited partnership - ANSWER-same characteristics as partnership. Only looses money ini...

The primary goal of a Financial Manager is to: A) Decrease the shareholder value of the firm. B) Increase the market potential of the firm. C) Assess and evaluate the market potential of the firm. D) Increase shareholder value of the firm by selecting value creating projects. E) None of the above. - ANSWER-D) Increase shareholder value of the firm by selecting value creating projects. Management of short-term operating cash flows is determined by Net Working Capital which is defined...

capital budgeting - ANSWER-the process of planning and managing a firm's long term investments Role of Finance - ANSWER-1) Manage Cash--> management of daily activities 2) What projects should we take on (investments) -how should we finance them? Owners=Managers? - ANSWER-Owners are the stockholders Managers are the professionals hired to act on behalf of the owners CFO - ANSWER-Chief Financial Officer -Managerial, Financial accounting, taxes MIS (management info systems) T...

Categories of Capital Budgeting Projects - ANSWER-Replacement projects to maintain business (normally done without much analysis) Replacement projects for cost reduction (fairly detailed analysis required) Expansion projects (complex decision making process) New product/market development Mandatory projects (safety/environmental) Principles of capital budgeting - ANSWER-1.) Decisions are based on incremental CFs, not accounting income. Externalities: effects the acceptance of a project ma...

The Sarbanes-Oxley Act of 2002 was passed in response to A) the agency issue B) false disclosures in financial reporting C) insider trading activities D) the decline in technology stocks - ANSWER-B) false disclosures in financial reporting A financial manager must choose between four alternative Assets: 1, 2, 3, and 4. Each asset costs $35,000 and is expected to provide earnings over a three-year period as described below. Based on the wealth maximization goal, the financial manager would ...

capital budgeting - ANSWER-the process of planning for purchases of assets whose returns are expected to continue beyond one year capital expenditure - ANSWER-a cash outlay that is expected to generate a flow of future cash benefits lasting longer than one year capital expenditures - ANSWER-usually range from 2 to 10 percent cost of capital - ANSWER-the cost of the funds (debt, preferred and common equity) supplied to it and used to finance investments made by a company. *aka the requir...