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45 Cards in this Set

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Business Finance
Study of long-term investments, how to pay for them, and how to manage daily finances.
CFO
Top financial officer in the firm.
Treasurer
Cash management, capital expenditures.
Capital budgeting
Managing the long-term investments.
Capital structure
Debt and equity used to finance
Working capital
Short-term assets and liabilities.
Working capital management
Management of the cash, inventory, and payables.
Sole proprietorship
Business owned by a single individual.
Partnership
Business owned by 2 or more individuals.
Partnership agreement
Documents specifying the distribution of profits and losses among the partners.
Corporation
Business entity treated as a legal person.
Articles of incorporation
Legal papers which designate a firm's name, nature of business, and intended life.
Bylaws
The rules which outline how a corporation will govern itself.
LLC
Cross between a partnership & a corporation.
Agency problem
Potential conflict between the managers and owners.
Stakeholder
Anyone other than the stockholders who have a claim on the cash flows of the firm.
Primary market
Original sale of securities by the issuer.
Secondary market
Market for trading securities after the original sale.
Public offering
Sale of securities to the general public.
Private placement
Negotiated sale of securities by an issuer to a specific buyer.
Dealer market
Any over-the-counter market.
Auction market
Securities market with a physical location that matches buyers with sellers.
Listed
When a company qualifies to trade on a particular exchange.
Balance sheet
Financial statement that lists a firms value at a particular date.
Current assets
Normally converts to cash within one year.
Fixed assets
Has a relatively long life.
Tangible assets
Fixed asset with a physical existence.
Intangible asset
Fixed asset without a physical existence.
Shareholder's equity
Residual value of a corporation after all the debts have been paid.
Net working capital
Difference between a firm's current assets and its current liabilities.
Liquidity
Ease and speed with which an asset converts to cash.
GAAP
Common set of procedures and standards for preparing audited financial statements.
Income statement
Reflects a firm's performance over a period of time.
Earnings per share
Amount of net income attributable to each share of stock.
Noncash items
An expense charged against revenues that does not affect the cash flow of a firm
Average tax rate
Total tax divided by total taxable income.
Marginal tax rate
Amount of tax payable on the next taxable dollar earned.
Operating cash flow
The cash generated from a firm's normal business activities.
Cash flow from assets
Cash available to distribute to creditors and stockholders.
Net capital spending
The amount of a firm's cash flows that are spent on fixed assets.
Free cash flow
Another term for cash flow from assets
Cash flow to creditors
Interest paid minus net new borrowing.
Cash flow to stockholders
Dividends paid minus the net new equity raised.
Example of current asset
Inventory
What is true of most fixed assets?
The book value decreases over time.