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15 Cards in this Set
- Front
- Back
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Advantage of sole proprietorship |
1. Single taxation 2. Ease of setup 3. No separation of ownership and control |
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The major way in which the roles and obligations of the owners of a limited liability company differ from the roles and obligations of limitef partners in a limited partnership |
The owner so a LLC can take an active role in tunning the company |
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The major duty of a financial |
1. Make investment decisions 2. Make financial decisions 3. Manage cash flow from operating activities |
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Whos interest should a financial manager consider paramount when making a decision |
Stockholders who have risked thei money |
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Primary market transaction |
Transaction between corporstion and investors |
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When a rich individual or organization purchases a large fraction of the stock of a poorly performing firm and in ding so gets enough votes to replace the board of directors and CEO |
Hostile takeover |
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Steps of financial cycle |
1. People invest/ save their money 2. Mone flows to companies who use funds to grow 3. Money flows back to savers and investors |
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Investment by wealthy individuals and endowments is a major source of money for who |
1. Private equity funds 2. Hedge fund 3. Venture capital funds |
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The main reason it id necessary for public companies to follow rules/ formats set out but GAAP when creating finacial statements |
It makesit easier to compare the financial results of different firms |
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A smal company has current assets of $112,000 and current liabilites of $117,000. What does that mean |
Since the working capital is negative, the company will not have enough funds to meet its obligations |
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A software company aquired a small comany in order to acquire the patents that it holds. Where wil the cost of the acquisition be recorded on the statement of cash flow |
As an outflow under investment activities |
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The overarching principles that a financial manager should follow when making decisions |
Decisions should increase the value of the firm to its investors. |
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The value of a commodity or an asset to a firm or its investors is determined by its competative market price. When the value of the beneft exceeds the value of the cost in terms of market price, the decision will increase the market value of the firm |
Valuation principle |
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You are scheduled to receve $10,000 in one year. What will be the effect of an increase in the interest rate on the present value of this cas flow |
It will cause the present value to fall |
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If equivalent investment opporrunities trade simultaneously in different competitive markets, then they must trade for the same price in both markets |
The Law of One Price |
