Finance Ch 1

Finance addresses how money is raised and used by individuals, businesses, and governments
Corporation state-created entity that is authorized to conduct business and offer its owners an investments with an unlimited life
treasurer in larger organizations, this officeholder supervises the firms credit and inventory managers, as well as the director of capital budgeting, and reports to the firm’s chief financial officer
Limited Liability attribute of the corporate form of an organization limits an owners potential losses to the purchase price of the owners shares
business ethics code of behavior specifies how the firm and its employees will treat employees and stakeholders
limited partner a participant in a partnership, whose personal assets may not be seized to satisfy the debts of the partnership
double taxation of dividends US Internal Revenue Service taxes the taxable income of the corporations as well as the taxable investment income of the firms shareholders
Shareholder wealth maximization primary goal of financial management that is evaluated by the effect of a decision or an action on the value of the firm
stakeholder describes individuals and groups, internal and external, whose support is critical to the success of the organization
value present worth of the future cash flows generated by an asset or firm, discounted at a rate appropriate for the riskiness of the cash flows
Accounting, investments, credit CFOs are responsible for which 3 departments?
Corporate finance focuses on financial decisions that corporations need to make to run the firm; objective of the decisions is to maximize shareholder value
capital market includes the stock & bond markets which are both under supervision of SEC; include entities like stockbrokers, banks, mutual funds, insurance company that deal with capital for different purposes
investments ex: security analysis, market analysis, behavioral finance
annual report required by the SEC and includes the audited document that shows the company’s financial results for the past year and management’s discussion about the future outlook and plans
Income statement divided into two important parts: operating and non operating sections; also known as the profit and loss statement
statement of retained earnings explains the changes in a company’s retained earnings over the accounting year
statement of cash flows provides details about the flow of funds from operating, investing, and financing activities
balance sheet has three segments that when analyzed together give an idea of what the company owns and what it owes

Leave a Reply

Your email address will not be published. Required fields are marked *