38898134
Descripción
Fichas por Valentin Desvigne, actualizado hace más de 1 año
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Creado por Valentin Desvigne
hace más de 1 año
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| Pregunta | Respuesta |
| Agency Problem | The possibility of conflict of interest between the owners (shareholders) and management of a firm (financial manager) |
| Real Assets | Generate cash inflows and income: - tangible assets - intangible assets |
| Tangible asset | An asset that has physical substance. - plants - machinery - infrastructure |
| Intangible assets | An asset that has no physical form but a value based on the rights conferred to the firm. - patents - goodwill - trademarks - R&D - marketing & advertising |
| Financing assets | Firms can borrow (debt), reinvest incoming cashflows, and sell additional shares of (stock) to shareholders ... |
| What do financial managers ask regarding assets? | 1) Investment decisions: What investments to make? How to spend money? - purchase of real assets 2) Financing decisions: How to finance/ pay for these investments? - sale of financial assets |
| Stakeholders' desire | Shareholders may be different: wealth, risk tolerance, investment horizon. Same Goal: increase the value of their investment (value of corporation and stock price). |
| Opportunity cost | Alternatives outside the firm set standards for investments inside the firm. Financial managers add value when internal investments generate greater returns than if shareholders had made investments themselves outside. |
| Financial assets | Claims on real assets or the income/cash flow generated by them. - Bank loans - Corporate bonds |
| Securities | Claims on real assets or the income/ cash flow generated by them and can be held and traded on financial markets. - Bonds - Shares of stock - other specialized instruments |
| Bank loan | Debt from a bank. Cash to corporation in exchange for promise to repay the loan + interest |
| Capital budgeting | Planning and managing a firm's long-term investments. Aka: Capital expenditure (CAPEX) - Firms often prepare an annual capital budget listing major projects approved for investments - Investment decisions can be referred to as capital budgeting. |
| Equity investors | Shareholders of the company do not get fixed returns but shares that offer a fraction of future profits and cash flow. - Contribute to equity financing |
| Capital structure | A firm's mix of debt and equity financing |
| Capital | Firm's money for long-term investing. |
| Equity financing | 1) sale of ownership through the issuance of new shares of stock 2) reinvesting of cash flow generated by existing assets (no new shares) |
| Payout decision | The decision to pay dividends or repurchase shares |
| Market Capitalization (Market Cap) | The value of a firm calculated by: share price x no. of outstanding shares. Ex: $20 * 2million = $40million |
| Corporation | Legal entity distinct from its owners. Can make contracts, be sued, borrow/lend money, and carry on business. In U.S.: formed under articles of incorporation. |
| Articles of incorporation | Identifies and sets out the purpose of the business and how it is to be governed & operated. Specifies the board of directors. |
| Limited liability | Shareholders cannot be held responsible for the corporation's debts. A corporation may declare bankruptcy but the owner's personal assets (yachts) cannot be seized. |
| Permanence of corporations | Separation of ownership and control allows for corporations to last indefinitely. Disadvantage: can sometimes lead to managers serving their own best interest as opposed to stockholders'. |
| Chief Financial Officer (CFO) | Deeply involved in financial policy and financial planning and is in constant contact with the CEO and other top management. |
| Treasurer | Responsible for the management of a company's cash. - currency trading - financing transactions - bank relationships |
| Controller | Responsible for internal accounting, oversees preparation of financial statements and tax returns. |
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