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Based on terms from Fundamentals of Corporate Finance (10th edition) by Ross, Westerfeild, and Jordan These flashcards copied from thisnameistaken (another Quizlet user)

working capital management

how will we manage the day-to-day financial activities?

capital structuring

how will this investment be financed?

capital budgeting

what long term investments should the firm make?

capital budgeting

the process of planning and managing a firm's long-term investments.

capital structure

the mixture of debt and equity maintained by a firm

capital budgeting

the process of planning and managing a firm's long-term investments.

agency problem

the possibility of conflict of interest between the owners and management of the firm

net working capital

current assets - current liabilities

net working capital

what is the term for the money you have for daily operating?


_________ does not affect cash flow.

no, because the agent is the principal

would there be an agency problem in a sole proprietorship?

noncash expenses

expenses charged against revenues that do not directly affect cash flow, such as depreciation.

generally accepted accounting principles (GAAP)

the common set of standards and procedures by which audited financial statements are prepared.


earnings before interest and taxes (EBIT) + depreciation - taxes

operating cash flow

cash generated from a firm's normal business activities

common-size statement

a standardized financial statement presenting all items in percentage terms. balance sheet items are shown as percentage of assets and income statement items as a percentage of sales.

profit margin

net income/sales

income statement

what financial statement do you need to figure out your profit margin?

how much profit is generated for each dollar in sales

what is a profit margin?


the process of accumulating interest in an investment over time to earn more interest.

compound interest

interest earned on both the initial principal and the interest reinvested from prior periods.

simple interest

interest earned only on the original principal amount invested.

Earnings before interest and tax

Sales - Cost of goods sold - Operating expenses

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