Finance 301 - 1028 Words

Finance 301 Review 1. The following are advantages to incorporating a business: A. Easier access to financial markets to raise capital through sale of stocks and bonds. B. Limited Liability C. Becoming a legal entity that can have a life in perpetuity. 2. Board of directors is elected by, and represents the interests of the shareholders of the corporation. 3. Corporate managers are expected to make capital budgeting and other decisions that are in the best interest of the corporations shareholders. 4. Sound judgment and effective decision making are important attributes for financial managers because they represent the means to the desired end, to maximize the firm’s stock price, which in turn maximizes shareholder wealth. 5.†¦show more content†¦29. A common size balance sheet portrays all of the items on the balance sheet as a percentage of the firm’s total assets, and a common size income statement portrays all of the items on the income statement as a percentage of the firm’s total revenues. 30. Free cash flow is cash flow that is available for distribution to all of the company’s investors (stockholders and creditors) after paying current expenses (other than interest) and taxes, maintain adequate working capital, and making the investments necessary for growth. Market Value added- Market value of equity – book value of equity Market to book ratio- Market value of equity/book value of equity Return on assets (ROA)- After-tax operating income/ total assets Return on capital (ROC)- after-tax operating income/(long term debt + equity) Return on equity(ROE)- Net income/ Equity EVA- after-tax operating income –cost of capital x capital Operating profit margin- after-tax operating income/sales Asset turnover- sales/total assets at start of year Fixed asset turnover- Sales/fixed assets at start of year Receivables turnover- Sales/ receivables at start of year Average collection period- receivables at start of year/ (sales/365) Inventory turnover- Cost of goods sold/ inventory at start of year Days in inventory- Inventories at start of year/ (cogs/365) Long term debt ratio- long term debt/(long term debt + equity) Long term debtShow MoreRelatedFinance 301 Sample Final Exam1138 Words   |  5 PagesQuestion 1 - Bond Valuation Assume the following information for bonds A and B. Both bonds have the same YTM and have semi-annual coupon payments. Bond B is currently selling at par. Face Value Maturity Coupon Rate Bond A 1000 30 yrs 8% Bond B 1000 20 yrs 10% a) What is the price for Bond B (2 pts)? What is the current yield for Bond B (2 pts)? Bond A is selling at a ________(discount /par/Read MoreWeek 3 Individual Assignment Fin/419 - Finance for Decision Making1390 Words   |  6 PagesWeek 3 Individual Assignments Finance for Decision Making FIN/419 January 30, 2012 Chapter 4: Problem 4-23 – Personal Finance Problem Funding your retirement - You plan to retire in exactly 20 years. Your goal is to create a fund that will allow you to receive $20,000 at the end of each year for the 30 years between retirement and death (a psychic told you would die exactly 30 years after you retire). You know that youRead MoreLoan Is Not For An Additional Six ( 6 )1120 Words   |  5 Pagesand endorsement to the title policy. Facility B) The $740,000 Revolving Construction Line of Credit will provide sufficient proceeds for the Borrower to build 2 units at one time; the average cost of each unit is $326,000 of which the Bank will finance 100%. This figure consists of $979,500 for direct construction and $25,000 in interest reserve proceeds held back for each unit. Considering the $351,500 cost for each unit the total aggregate funding under Facility B will be $1,054,500. ProceedsRead MoreRisk Allocation On Project Structuring And Current Practices2683 Words   |  11 PagesSTRUCTURING AND CURRENT PRACTICES I. Introduction Project finance is best understood in terms of a risk allocation which reconciles the potentially conflicting objectives of borrowers and lenders by utilizing the long-term economic and commercial linkages between the sponsors, lenders and third party participants involved with a project. (Howcroft Fadhley, 1998). In theory, the basic principle of risk allocation for the project finance is â€Å"Allocating project risks to the most suitable participantRead MoreMassey-Ferguson, 1980: Case Study Solution Essay1905 Words   |  8 Pagesthe short-term debt, and offer greater protection to the incumbent debtholders. However, such an alternative is unfeasible, since a dilution of their voting power would be unacceptable to current shareholders, and the market would be unwilling to finance such a debt-ridden company. e) Refinancing: Debt-equity Swap This is the most attractive option for Massey-Ferguson’s future survival, although it will be detrimental to the debtholders’ short-term interests, and expose them to higher risk asRead MoreInternational Business Competing in the Global Marketplace 8th Edition Charles W. L. Hill5106 Words   |  21 PagesSeries in Finance Alexander/Sharpe/Bailey Geisst Fundamentals of Investments Megginson Investment Banking in the Financial System Andersen Corporate Finance Theory Melvin Global Derivatives: A Strategic Risk Management Perspective Bear/Moldonado-Bear Gitman International Money and Finance Principles of Managerial Finance* Principles of Managerial Finance–– Brief Edition* Mishkin/Eakins Financial Markets and Institutions Free Markets, Finance, Ethics,Read MoreFinance1176 Words   |  5 PagesDUKE UNIVERSITY Fuqua School of Business FINANCE 251F/351 Individual Assignment #1 Cost of Capital at Ameritrade Prof. Simon Gervais Spring 2010 – Term 1 In this case, you have to use data from comparables to estimate the cost of capital at Ameritrade. The process involves a few stages that this handout will guide you through. First, we need to determine which set of ï ¬ rms to use as comparable ï ¬ rms. You should try two diï ¬â‚¬erent sets. The ï ¬ rst set will include three discount brokerage ï ¬ rms: CharlesRead MoreInstructor’s Manual Fundamentals of Financial Management60779 Words   |  244 Pagesbasic financial management course. Fundamentals of Financial Management sequences things in order to cover certain foundation material first, including: the role of financial management; the business, tax, and financial setting; the mathematics of finance; basic valuation concepts; the idea of a trade off between risk and return; and financial analysis, planning, and control. Given a coverage of these topics, we then have found it easier to build upon this base in the subsequent teaching of financialRead MoreImportance Of Personal Finances : The National Financial Educators Council2357 Words   |  10 Pages Importance of Personal Finances Jonathan Woods Liberty University Online ACCT 301-B08 LUO 201520 Week 7 According to the National Financial Educators Council, youth across America are slowly becoming illiterate when it comes to their personal finances. A study was introduced by Beierlein Neverett (2013) through Harris Interactive for the National Council of Economic Education that stated, â€Å"Participants, 3,512 adults aged 18 and above and 2,242 students in grades 9-12, took a 24Read MoreCapital Structure-Myers12949 Words   |  52 Pages09:10:16 2007 Journal of Economic Perspectives-Volume 15, Number 2-Spring 2001-Pages 81-1 02 Capital Structure Stewart C. Myers he study of capital structure attempts to explain the mix of securities and financing sources used by corporations to finance real investment. Most of the research on capital structure has focused on the proportions of debt vs. equity observed on the right-hand sides of corporations balance sheets. This paper is an introduction to that research. There is no universal