Financial Management: Principles and Applications
Aug 01, 2011
What is the capital market? How is the primary market different from the
Secondary market? In your opinion, are these markets efficient? Why?
The capital market provides investors the data showing the rates on return of investments
(ROR) compiled from company portfolios. The capital market is fast paced and typically is the
environment where the selling of stock is sold at good prices. For the active investor, the capital
market is the shortcut icon if you will, for buying and selling of stock.
The primary market is a market by which for the first time, a company offers stock to
potential investors. This is the one and only
…show more content…
This piece of legislation literally changed how business is to be conducted with regard to finance. Once this passed, publicly held businesses had no choice but to conduct themselves ethically or risk high penalties and possibly banishment from stock trading. One example of levied penalties for non-compliance is in the case of U.S. SECURITIES AND EXCHANGE COMMISSION v JAMES E. KOENIG [(Litigation Release No. 22054/ July 29, 2011; Accounting and Auditing Enforcement Release No. 3308/July 29, 2011)]. The SEC alleges that Mr. Koenig, former CEO of Waste Management falsified financial results and overstated profits by $1.7 billion dollars, beginning in 1992 and continuing through 1997. After an 11 week-long trial, the Jury came back with guilty verdicts on all 60 counts of the indictment. He has been ordered to pay $1.25 million dollars upfront and regular installment payments totaling another $1.25 million dollars over the next two years. What ratios measure a corporation’s liquidity? What are some problems?
Associated with using such ratios? How would the DuPont analysis overcome these?
Financial ratio analysis helps to identify strengths and weaknesses of a company. Comprised of financial data, the following illustrates how to arrive at the numbers: current assets (numerator) current ratio = current liabilities (denominator)