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45 Cards in this Set
- Front
- Back
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characteristics of successful companies |
1. Skilled people 2. Strong Relationship 3. Enough Funding |
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a person or organization with cash now. |
provider |
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a person or organization with opportunities to convert cash now into cash later. |
user |
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The corporate life cycle |
1. starting up as a proprietorship 2. more than one power: a partnership 3. Many Owners: Corporation 4. Growing a Corporation: Going Public 5. Managing a Corporation's Value |
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an unincorporated business owned by one individual. |
Proprietorship |
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two or more persons or entities associate to conduct a non-corporate business for profit. |
Partnership |
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a business arrangement which by two or more individuals agree to share in all assets profits and financial and legal liabilities of a jointly owned business |
General Partnership |
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certain partners are designated general partners and others limited partners |
Limited Partnership |
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2 Classification of Partnership |
1. General Partnership 2. Limited Partnership |
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he can only lose the amount of the investment in the partnership. typically have no control - it rests solely with general partners - and their returns are likewise limited. |
Limited Partners |
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Partner that have unlimited liability. |
General Partners |
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LLP AND LLC |
Limited Liability Partnership Limited Liability Company |
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a legal entity created under state laws, and it is separate and distinct from its owners and managers. |
Corporation |
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professional such as doctors, lawyers, and accountants form a corporation. |
Professional Corporation or Professional Association |
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Corporation that meets all the requirements but elect to be taxed as if a proprietorship or partnership. |
S Corporation |
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Individuals or businesses that provides funding for companies that are too risky for banks |
Angel or Venture Capitalists |
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Regulates stock trading, to sell shares in a public stock market. |
Security and Exchange Commission |
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where a company applies to be a listed stock on a SEC-registered stock exchange |
Security And Exchange Commission |
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it is also called initial public offering (IPO) because it is the first time the company's shares are sold to the general public. |
Growing a Corporation: Going Public |
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IPO's are often aided by ____________ with ____________ that employs ________ who are registered with SEC to buy and sell stock on behalf of clients. |
investment banks, brokerage firms, broker |
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When public company raises more funds by selling or issuing additional shares of stock. |
Seasoned Equity Offering |
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It is a company's ability to generate cash flows now and in future. |
Corporation's Value |
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(3) properties of its cash flows |
Size Timing Risk |
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the ______ of the expected future cash flows is important - bigger is better |
size |
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the ________ of cash flows counts - cash received sooner is more valuable than cash that comes later. |
timing |
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the ______ of the cash flows matters - safer cash flows are worth more than uncertain cash flows. |
risk |
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manager increase the firm's value by _________ the size of the expected cash flows, by ___________ their receipt, and by _________ their risk. |
Increasing, speeding up reducing |
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they are available or free for distribution to all of the company's investors including creditors and stockholders. |
Free Cash Flows (FCF) |
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the rate of return required by investors, a cost from the company's point of view |
Weighted Average Cost of Capital (WACC) |
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the price that we observe in financial markets and should be equal to the intrinsic value |
Market Price |
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A conflict of interest that exist in any relationship in which one party is expected to act in the best interest of the other. |
Agency Problem |
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a set of rules that control the companies behavior toward its directors, managers, employees, shareholders, creditors, customers, competitors, and community |
Corporate Governance |
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it is a fiduciary duty for most corporations but this does not mean that managers should break laws or violate ethical considerations, or that managers should be unmindful of employee welfare or community concern. |
Maximizing Shareholders Wealth |
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A corporate form that expands directors fiduciary responsibilities to include interest other than shareholders interest. |
Benefit Corporation (B-Corp) |
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it is an estimate of the stocks true value as calculated by a competent analyst who has the best available risk and return data
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Intrinsic Value |
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when managers ________ intrinsic value of stocks, they improve people's quality of life. |
increase |
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It requires efficient low cost businesses that produce high quality goods and services at the lowest possible cost. |
Value Maximization |
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It strengthened protection for whistleblowers who report financial wrongdoing. |
Sarbanes Oxley (SOX) Act of 2002 and Dodd Frank Wall Street Reform and Cosumer Protection Act of 2010 |
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Net Savers |
Individuals/ Public |
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Net Provider |
Non Financial Corporation Financial Corporation Government |
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an essential component of starting and maintaining a successful business. |
capital |
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It is the money and assets needed by a business to produce the products or services it offers. |
Capital |
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(3) Transfers of Capital from Savers ro Users |
1. Direct Transfer 2. indirect transfers through investment bank 3. indirect transfers through financial intermediary. |
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(3) important features of the capital allocation process |
1. new financial securities are created 2. different types of financial institutions often act as intermediaries between providers and users. 3. the activities occur in a variety of financial markets. |
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all partners or members enjoy limited liability with regard to business liabilities and their potential losses are limited to their investment in llp |
LLP and LLC |
