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18 Cards in this Set

  • Front
  • Back
capital budgeting
planning/managing firms long term investments. identify opportunities worth more to the firm than they cost to acquire
capital structure
mix of long term debt and equity the firm uses to finance its operation->how much should they borrow and least way to borrow.->how to pay assests with debt or equity?
working capital
firms short term assests(inventory and short term liabilaties). manage day to day finances
advantahges of sole propritorship(4)
1.easy to start
2.least regulated
3.all profits to owner
4.taxed once as personal income
disadvan of sole propiertorship(4) to life of owner
2.equity to capital to owners personal wealth
3.VERY liable
4.difficult to sell interest
advan of partnership(3)
1.2 or more owners
2.more capital to start
3.taxed once as personal income
disadvan of partnership
1.unlimited liabilaty
2.1 partner dies or sells=done
3.difficult to transfer
general and limited partnership
g-all parties liable

lim-1 has limited liabilaty
corp. advantages liabilaty
2.unlimited life
3.seperation of owner/management
4.transfer is easy
5.easy to raise capital
6.things go bad->owners arent resonsible besides assets
corp. disadvantages
1.sep of ownership/management
2.double taxation-income @corporate rate and dividends @personal rate
taxation of c-corp/s-corp
c-corp: taxed as whole

s-corp: each taxed individually
goal of corp.
maxamize current value of companies stock
agency problem
corp. does things in favor of stockholders not employees
stake holder
other than a stock holder or creditor who has a potential claim on the cash flow
financial market
bringing buyers/sellers together where debt and equity is bought and sold
primary markets
selling securities to general public
secondary markets
one or more owner or creditor selling to another after the orginal sale
sarbox act
management must tell truth about their financial reportings