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11 Cards in this Set
- Front
- Back
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What are the three primary areas of finance?
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1. Corporate Finance
2. Investments 3. Institutions |
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Three other terms for Corporate Finance?
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1. Managerial Finance
2. Financial Management 3. Business Finance |
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Goal of a financial manager (and firm)?
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- Publicly traded firms: To maximize shareholder wealth
- Privately held companies: To maximize owner wealth |
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What is an asset manager?
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Someone who invests funds in an attempt to earn positive returns
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Definition of accruals
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Obligations the company has incurred in the current period but not yet paid
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What question does forecasting answer?
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Given our expectations for future growth, how much financing will we need in the next 1, 5, 10 years?
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What is the main goal of financial forecasting?
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To understand the implication of today's decisions on tomorrow's performance.
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What are the six steps of The Percent of Sales Method?
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1. Project sales revenues and expenses
2. Forecast change in spontaneous balance sheets accounts 3. Deal with discretionary accounts 4. Calculate retained earnings 5. Determine total financing needs/assets 6. Calculate DFN |
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What are the three ways to use Ratio Analysis?
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1. Cross Sectional (comparing, etc)
2. Trend Analysis/Time Series Analysis (self-compare) 3. GOALS |
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What are four reasons to use Ratio Analysis?
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1. Standardizes financial data
2. Flexibility - no rules 3. Help us know which questions to ask 4. Evaluating if a firm is meeting the goal of maximizing shareholder wealth |
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Four types of ratios?
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1. Liquidity
2. Asset use efficiency 3. Financing 4. Profitability |
