Business Finance Exam 1
Terms in this set (16)
a business partner whose potential financial loss in the partnership will not exceed his or her investment in that partnership
a business owned by a solitary individual who has unlimited liability for its debt
the management of a firm's long-term investments
a conflict of interest between the corporate shareholders and the corporate managers
capital structure decision
determining how much debt should be assumed to fund a project
primary advantage of being a limited partner instead of a general partner
maximum loss limited to the capital invested
Apply to a partnership that consists solely of general partners:
limited partnership life, active involvement in the firm by all the partners, unlimited personal liability for all partnership debts.
Corporations can raise large amounts of capital generally easier than partnerships can
Why should financial managers strive to maximize the current value per share of the existing stock?
Because they have been hired to represent the interest of the current shareholders.
financial statement that shows the accounting value of a firm's equity as of a particular date
the percentage of the next dollar you earn that must be paid in taxes is referred to as the ___________ tax rate.
Cash flow from assets
the cash flow of a firm that is available for distribution to the firm's creditors and stockholders
Net working capital may be a negative value
Taxes reduce both net income and operating cash flow
Decrease in the quick ratio
An increase in current liabilities will have what effect, all else held constant? Assume all ratios have positive values.
Equity multiplier, profit margin, and total asset turnover
describe the three parts of the DuPont identity
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