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27 Cards in this Set

  • Front
  • Back
share holders wealth
groups that have an interest in the running of the company.
why is there is a diff b/w stock holders and manager
agencey problems
agencey problems
chief finance officer
Oversees accounting, treasury, tax, and audit functions
Strategic planning, foreign currency management, managing risk form volatile interest rates, monitors production and inventory levels
over accounting related activities such as
Financial Accounting: preparation of financial statements such as balance sheet, income statement, statement of cash flows.
Cost Accounting: prepare operating budgets and monitor performance.
Taxes: prepare reports for local state and federal agencies
dis adv of sole prop
Hard to acquire capital
Unlimited liability
Long work hours with no division of labor
adv of partner
Easy to Form
Easier to raise capital
Some division of labor
adv of corp
Limited liability
Ability to raise capital
Division of labor
diss adv of corp
More difficult to start up
Agency costs—must hire managers to run can lead to owner/ agent conflict.
Double taxation of profits
adv of sole propr
Easy to start
You are the boss
Requires less capital to start
limited partnership
partner has limited liability
Cash Flow Generation Process
Raise Funds:
External: owners (equity) creditors (debt)
Internal: cash flow from operations sell off assets
Acquired assets:
Long term (plant and equipment)
Working capital (pay operating expenses)
Produce and Sell Products and Services:
Generates cash and accounts receivable which are converted to cash over time.
Dow Jones
Industrial-stock prices of 30 large industrial companies
Over the counter markets
Trade securities not listed on the exchanges.
Usually small companies that are relatively unknown and do not meet listing standards of exchanges.
Bank and insurance company, corporate bonds, preferred stocks most US treasury and municipal bonds are carried.
Commercial Banks
accept both demand and time deposits, loan to individuals, businesses and government.
Thrift Institutions
accept both demand and time deposits
holding period of return
current value+ div- orig pri
orig price
Investment Companies
mutual funds and real estate investment trusts
Pension Funds
pool contributions of employees and/or employers often managed by insurance companies or bank trust depts.
avg collection period
the length it takes for customers to pay there bill
Insurance Companies
receive periodic or lump-sum payments and invest these reserves to pay future claims
Finance Companies
issue debt securities or obtain commercial loans and lend to individuals and businesses. Some finance sale of products produced by parent company
Financial Intermediaries-
facilitate transfer of funds.
Money Markets
deal in short term securities (maturity of one year or less
Capital Markets
deal in long term securities ( maturity of more than 1 year.)
Primary Market
Market for new securities (funds go directly to issuing company
Secondary Market
Market for selling of existing securities (funds go to the present owner of the security)