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Study sets matching "corporate finance"

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Study sets matching "corporate finance"

65 terms
Corporate Finance
Capital Budgeting
Steps to Capital Budgeting
Principles of Capital Budgeting
project sequencing
-identifying and evaluating projects for which the cash flows…
1) Generating Ideas... 2) Analyzing project proposals... 3) Creatin…
1) Decisions are based on incremental cash flows, sunk costs…
-requires projects to be done in certain order
Capital Budgeting
-identifying and evaluating projects for which the cash flows…
Steps to Capital Budgeting
1) Generating Ideas... 2) Analyzing project proposals... 3) Creatin…
16 terms
Corporate Finance
Current Ratios
Quick Ratio
Cash Ratio
Net Working Capital to Total Assets
Current Assets/Current Liabilities
Current Assets-Inventory/Current Liabilities
Cash/Current Liabilities
Net working Capital/Total Assets
Current Ratios
Current Assets/Current Liabilities
Quick Ratio
Current Assets-Inventory/Current Liabilities
8 terms
corporate finance
debenture
expenditure
dilution
merger
trái khoán
chi tiêu
hòa tan/( việc/quá trình giảm bớt điều gì đó)
sát nhập
debenture
trái khoán
expenditure
chi tiêu
164 terms
Corporate Finance
Shareholder wealth
Increase
Decrease
Increase
Cash dividend and share repurchase have same effect on ___.
If cost of debt < earnings yield, share repurchase with borro…
If cost of debt > earnings yield, share repurchase with borro…
If stock price is < BVPS, share repurchase will _____ book va…
Shareholder wealth
Cash dividend and share repurchase have same effect on ___.
Increase
If cost of debt < earnings yield, share repurchase with borro…
21 terms
corporate finance
Capital Market based Models
financial and accounting based
capital structure and financial levera…
capital marekt oriented approaches
Capital Market based Models
financial and accounting based
46 terms
Corporate Finance
Financial management/ Corporate finance
Capital markets
Investments
4 main forms of business organizations
focuses on decisions relating to how much and what types of a…
Relates to the markets where interest rates, along with stock…
relate to decisions concerning stocks and bonds and include a…
1) sole proprietorship- an unincorporated business owned by o…
Financial management/ Corporate finance
focuses on decisions relating to how much and what types of a…
Capital markets
Relates to the markets where interest rates, along with stock…
72 terms
Corporate Finance
Coupon
Face Value
Coupon Rate
Maturity
The stated interest payment made on a bond.
The principle amount of a bond that is repaid at the end of t…
The annual coupon divided by the face value of a bond.
The specified date on which the principle amount of a bond is…
Coupon
The stated interest payment made on a bond.
Face Value
The principle amount of a bond that is repaid at the end of t…
109 terms
Corporate Finance
Categories of Capital Budgeting Projects
Principles of capital budgeting
Modified Accelerated Cost Recovery Sys…
1/2 Year convention (MACRS)
Replacement projects to maintain business (normally done with…
1.) Decisions are based on incremental CFs, not accounting in…
In US, most firms use SL depreciation for financial reporting…
Assumes asset is put into service in the middle of first year…
Categories of Capital Budgeting Projects
Replacement projects to maintain business (normally done with…
Principles of capital budgeting
1.) Decisions are based on incremental CFs, not accounting in…
102 terms
Corporate Finance
Corporate budgeting decisions are cons…
Typical capital budgeting steps
Five key principles of capital budgeting
Do we subtract finance costs/interest…
Corporate budgeting decisions are consistent with management'…
1. Generate good investment ideas... 2. Forecast CFs for each pr…
1. Decisions are based on incremental cash flow (plus externa…
No - the CFs are discounted using WACC, which includes the fi…
Corporate budgeting decisions are cons…
Corporate budgeting decisions are consistent with management'…
Typical capital budgeting steps
1. Generate good investment ideas... 2. Forecast CFs for each pr…
207 terms
Corporate finance
above par
acid test ratio
acquire
active return
yli tavoitteen
maksukykytesti
hankkia
tuotto suhteessa keskiarvoon
above par
yli tavoitteen
acid test ratio
maksukykytesti
30 terms
Corporate Finance
Initial investment for a new investment
Initial investment for a replacement p…
Annual after-tax operating cash flows…
Annual after-tax operating cash flows…
= FCInv + NWCInv
= FCInv + NWCInv − Sal0 + T (Sal0 − B0)
(S − C − D) (1 − T) + D or CF = (S − C) (l − T) + TD
ΔCF = (ΔS - ΔC) (1 - t) + tΔD
Initial investment for a new investment
= FCInv + NWCInv
Initial investment for a replacement p…
= FCInv + NWCInv − Sal0 + T (Sal0 − B0)
23 terms
Corporate Finance
Current Ratio
Quick Ratio
Liquidity Ratios (2)
Activity Ratios
current assets/current liabilities
current assets - inventory / current liabilities
Current Ratio and Quick Ratio
Inventory Turnover, Receivables Turnover, Payables Turnover,…
Current Ratio
current assets/current liabilities
Quick Ratio
current assets - inventory / current liabilities
30 terms
Corporate finance
EBIT
Market value added
Market to book ratio
Economic value added
Total revenues-costs-depreciation
(Share price x shares outstanding) - equity book value
Market value of equity / book value of equity
Operating income - (cost of capital x total capitalization)
EBIT
Total revenues-costs-depreciation
Market value added
(Share price x shares outstanding) - equity book value
74 terms
Corporate Finance
Finance
Corporate finance
Accounting
Stakeholder
is the discipline that determines value, evaluates a company'…
oversees a corporations investment and financial decisions
accumulates and reports financial information to facilitate e…
is an individual or business with a financial interest in the…
Finance
is the discipline that determines value, evaluates a company'…
Corporate finance
oversees a corporations investment and financial decisions
40 terms
Corporate Finance
A key assumption of the WACC model is…
A key assumption of the APV model is t…
Unlevered firm value is calculated usi…
The PV of interest tax shields can onl…
True.
False.
False.
False.
A key assumption of the WACC model is…
True.
A key assumption of the APV model is t…
False.
25 terms
Corporate finance
shaky start
revenue
make heavy losses
launch a company
niepewny start
dochód
przynosić duże straty
rozpoczynać działalność firmy
shaky start
niepewny start
revenue
dochód
36 terms
Corporate Finance
Sum of Discounted Cash Flows
Sum Cash Flows at IRR = 0
average net income/average book value
1+(NPV/Initial Investment)
NPV
IRR
AAR
PI
Sum of Discounted Cash Flows
NPV
Sum Cash Flows at IRR = 0
IRR
25 terms
Corporate Finance
Corporate finance
Accounting
Stakeholder
Tangible assets
oversees a corporations investment and financial decisions
accumulates and reports financial information to facilitate e…
is an individual or business with a financial interest in the…
are able to be touched: buildings, trucks, computers
Corporate finance
oversees a corporations investment and financial decisions
Accounting
accumulates and reports financial information to facilitate e…
152 terms
Corporate Finance
to make a transaction
to raise capital
to maintain share capital
to issue shares
произвести банковскую операцию
привлекать капитал, мобилизовывать капитал
поддерживать акционерный капитал на определенном уровне
выпускать акции
to make a transaction
произвести банковскую операцию
to raise capital
привлекать капитал, мобилизовывать капитал
19 terms
Corporate Finance
Weighted average cost of capital
Cost of preferred stock
Cost of equity capital
cost of equity using CAPM
Weighted average cost of capital
Cost of preferred stock
30 terms
Corporate finance
EBIT
Market value added
Market to book ratio
Economic value added
Total revenues-costs-depreciation
(Share price x shares outstanding) - equity book value
Market value of equity / book value of equity
Operating income - (cost of capital x total capitalization)
EBIT
Total revenues-costs-depreciation
Market value added
(Share price x shares outstanding) - equity book value
203 terms
Corporate Finance
a transaction
to raise capital
to maintain share capital
to issue shares
(банковская, деловая) операция
привлекать капитал, мобилизовывать капитал
поддерживать акционерный капитал на определенном уровне
выпускать акции
a transaction
(банковская, деловая) операция
to raise capital
привлекать капитал, мобилизовывать капитал
203 terms
Corporate Finance
a transaction
to raise capital
to maintain share capital
to issue shares
(банковская, деловая) операция
привлекать капитал, мобилизовывать капитал
поддерживать акционерный капитал на определенном уровне
выпускать акции
a transaction
(банковская, деловая) операция
to raise capital
привлекать капитал, мобилизовывать капитал
20 terms
Corporate finance
Katrian theory
Friedman Doctrine
Utilitarianism
Right and Justice theory
good working condition for employee
Legal = ethical
Profit for most people
highest possible for every one (glass ceiling)
Katrian theory
good working condition for employee
Friedman Doctrine
Legal = ethical
46 terms
Corporate Finance
Capital Project Categories
Assumptions of Capital Budgeting
sunk cost
opportunity cost
1) Replacement Projects... 2) Expansion Projects... 3) New Products…
-Decisions are based on cash flows (not accounting income)... -T…
-a cost that has already been incurred and cannot be changed…
-what a resource is worth in its next-best use
Capital Project Categories
1) Replacement Projects... 2) Expansion Projects... 3) New Products…
Assumptions of Capital Budgeting
-Decisions are based on cash flows (not accounting income)... -T…
30 terms
Corporate finance
capital gain
due diligence
prospectus
flotation
zysk kapitałowy- to wzrost wartości samego kapitału, np. w wy…
należyta staranność- poddanie przedsiębiorstwa, będącego pote…
prospekt emisyjny- dokument opisujący szczegółowo stan prawny…
emisja/ uruchomienie/ wahania
capital gain
zysk kapitałowy- to wzrost wartości samego kapitału, np. w wy…
due diligence
należyta staranność- poddanie przedsiębiorstwa, będącego pote…
15 terms
Corporate Finance
capital budgeting
capital structure
working capital
sole proprietorship
The process of planning and managing a firm's long-term inves…
A firm's capital structure (or financial structure) refers to…
The term working capital refers to a firm's short-term assets…
A sole proprietorship is a business owned by one person. This…
capital budgeting
The process of planning and managing a firm's long-term inves…
capital structure
A firm's capital structure (or financial structure) refers to…
24 terms
Corporate Finance
ROE
ROA
ROIC
Gross profit margin
NI/SE
NI/TotalAssets
EBIT(1-t)/InvestedCapital
grossProfit/sales
ROE
NI/SE
ROA
NI/TotalAssets
64 terms
Principles of Corporate Finance - Midterm
What is the formula for ROE?
What is the formula for the EBITDA mul…
What is the formula for the EBIT multi…
What is the formula for the P/E multip…
Nett. income/Equity
Enterprise value/EBITDA
Enterprise value/EBIT
equity value/Nett income or Share price/Earnings per share
What is the formula for ROE?
Nett. income/Equity
What is the formula for the EBITDA mul…
Enterprise value/EBITDA
221 terms
CorporateFinance
GDP (gross domestic product)
GNP (gross national product)
domestic
value
BIP (Bruttoinlandsprodukt)
BNP
inländisch; innerstaatlich
Wert
GDP (gross domestic product)
BIP (Bruttoinlandsprodukt)
GNP (gross national product)
BNP
69 terms
Corporate finance
Market to book ratio
Market capitalization
Market value added
Book rate of return
Market value of equity over book value of equity
Number of shares outstanding multipled by the share price
Market capitalization minus book value of equity
Calculated as book income over book assets. Components reflec…
Market to book ratio
Market value of equity over book value of equity
Market capitalization
Number of shares outstanding multipled by the share price
17 terms
Corporate finance
Perpetuities
Annuities
EAR
APR
C/r
PV=C x (1-(1+r)^-t) / r)
(1 + MR)^12 - 1
MR X 12
Perpetuities
C/r
Annuities
PV=C x (1-(1+r)^-t) / r)
18 terms
Corporate finance
Retained earnings are:... a. The amount o…
Generally (during the years 1989-2006)…
Generally, managers of corporations pr…
Shares of stock that have been repurch…
c. The difference between the net income... earned and the divid…
d. Internally generated cash
d. I, II, and III
c. Treasury stock
Retained earnings are:... a. The amount o…
c. The difference between the net income... earned and the divid…
Generally (during the years 1989-2006)…
d. Internally generated cash
17 terms
Corporate Finance
Which of the fillowing statements conc…
Which of hte following statemnets abou…
What is the projects PI?
The NPV profiles of two projects will…
а. Выбирая только один из проектов мы сравниваем его кэш флоу…
Если IRR меньше чем cost of capital то NPV не может быть поло…
PI= SUM OF DCF / INTITAL INVESTMENT... (2 727 + 1 653 + 1 503) /…
В точке пересечения двух проектов (crossover point/rate) их n…
Which of the fillowing statements conc…
а. Выбирая только один из проектов мы сравниваем его кэш флоу…
Which of hte following statemnets abou…
Если IRR меньше чем cost of capital то NPV не может быть поло…
89 terms
Corporate Finance
Chapter 1
Major decisions made by financial mana…
Advantages and Disadvantages of formin…
Agency Problem (How do corporations en…
...
Investment/ capital budgeting ( decide which real assets to i…
corporations are distinct, permanent legal entities... + allow f…
refers to a conflict of interest between a company's manageme…
Chapter 1
...
Major decisions made by financial mana…
Investment/ capital budgeting ( decide which real assets to i…
14 terms
Corporate Finance
What is the Objective In Corporate Fin…
What is a Pragmatic Issue with the Obj…
What are the Assumptions needed to Max…
What are the two mechanisms that Stock…
The Objective In Corporate Finance is to Maximize the Value o…
Because you are hired and fired by stockholders of the compan…
4 Linkages... 1. Managers to Stockholders, ... 2. Managers to Bondh…
Annual Meeting and the Board of Directors
What is the Objective In Corporate Fin…
The Objective In Corporate Finance is to Maximize the Value o…
What is a Pragmatic Issue with the Obj…
Because you are hired and fired by stockholders of the compan…
101 terms
Corporate Finance
Operating Cycle equals
Cash Cycle equals
Net Working Capital plus Fixed Assets…
Net Working Capital equals
Inventory Period plus Accounts Receivable Period
Operating Cycle minus Accounts Receivable Period
Long Term Debt plus Equity
Cash plus Other Current Assets minus Current Liabilities
Operating Cycle equals
Inventory Period plus Accounts Receivable Period
Cash Cycle equals
Operating Cycle minus Accounts Receivable Period
corporate finance
the process of planning and managing a…
the mixture of debt and equity used by…
the management of a firm's short-term…
the primary goal of financial management
capital budgeting
capital structure
working capital management
maximize the current value per share of the existing stock
the process of planning and managing a…
capital budgeting
the mixture of debt and equity used by…
capital structure
50 terms
Corporate Finance
Income Statement
Cash Flows
NPV
IRR
Operating Revenue-Depreciation-Cost of Labor- Other Costs-Dep…
Year 0: -Initial investment + EBIT (after taxes) - Net workin…
-Initial investment + CF₁/(1+r) + CF₂/(1+r)²...+ CFⁿ/(1+r)ⁿ +…
The rate of return of a project regardless of the market rate…
Income Statement
Operating Revenue-Depreciation-Cost of Labor- Other Costs-Dep…
Cash Flows
Year 0: -Initial investment + EBIT (after taxes) - Net workin…
148 terms
CORPORATE FINANCE
The price of a bond depends on
When a corp or the govt want to borrow…
A bonds valuation depends on
Interest only loan
Interest rates/ the rate being paid on a current issue and th…
Debt securities or bonds
Cash flow
Borrower will pay interest every period and the main principl…
The price of a bond depends on
Interest rates/ the rate being paid on a current issue and th…
When a corp or the govt want to borrow…
Debt securities or bonds
62 terms
Corporate Finance
Corporate Finance
Financial System
Limited Liability Company
Corporation
The study of relationships that exist between business decisi…
A set of arrangements that facilitate the lending and borrowi…
Operates and is taxed like a partnership but retain limited l…
A business created as a distinct legal entity composed of one…
Corporate Finance
The study of relationships that exist between business decisi…
Financial System
A set of arrangements that facilitate the lending and borrowi…
247 terms
Corporate Finance
Bond
Bondholder
Bondissuer
Face Value, Par Value
A fixed income financial investment issued by government, com…
Gives bonds
Sells bonds
Other names for the Principal of the bond
Bond
A fixed income financial investment issued by government, com…
Bondholder
Gives bonds
123 terms
Corporate Finance
"C" corporations
CEO
corporation
dividend payments
...
...
...
...
"C" corporations
...
CEO
...
79 terms
Corporate Finance
1. What is a limited partnership that…
2. What is the least likely source of…
3. What are the advantages of taking a…
4. Which is an example of public debt?
a. Venture Capital Firm
a. I said "Family Investors"
a. Greater liquidity and greater access to capital
a. Bond issue
1. What is a limited partnership that…
a. Venture Capital Firm
2. What is the least likely source of…
a. I said "Family Investors"
19 terms
Corporate Finance
Capital Budgeting
Why do firms undertake capital budgeti…
What is the purpose of capital budgeti…
NPV profile
the process of planning for purchases of assets whose returns…
for the purchase of machinery, plant construction or expansio…
to plot a course of action for the firm, the firm should only…
a graph that shows the NPV for a variety of discount rates
Capital Budgeting
the process of planning for purchases of assets whose returns…
Why do firms undertake capital budgeti…
for the purchase of machinery, plant construction or expansio…
23 terms
Corporate Finance
Shareholder's Liability
General Partnerships
4 Basic Area's of Finance
Corporate Finance
Limited to the amount the shareholder invested in the corpora…
is difficult to transfer ownership and each owner has unlimit…
Corporate Finance... Investments... Financial Institutions... Internat…
(Business Finance) Involves Taking on long-term investments.…
Shareholder's Liability
Limited to the amount the shareholder invested in the corpora…
General Partnerships
is difficult to transfer ownership and each owner has unlimit…
120 terms
Corporate Finance
Worst balance sheet item?
Shareholders Equity
Problem with accounting
Corp Fin View of the firm
On assets: ... Goodwill - difference between what you paid and b…
Backward looking number because it includes all retained earn…
It chronicles the past and that's it
Assets:... Assets in Place... Existing Investments... Generate cashf…
Worst balance sheet item?
On assets: ... Goodwill - difference between what you paid and b…
Shareholders Equity
Backward looking number because it includes all retained earn…
15 terms
Corporate Finance
Board Committees
Committees of the Board: Audit
Committees of the Board: Compensation
Committees of the Board: Nominations
1. Audit... 2. Compensation... 3. Nominations
Provides oversight of financial reporting and disclosure
Determines management compensation
Recruits board members, prepares succession plan for senior m…
Board Committees
1. Audit... 2. Compensation... 3. Nominations
Committees of the Board: Audit
Provides oversight of financial reporting and disclosure
39 terms
corporate finance
Risk that affects all firms is called​…
The portion of an​ asset's risk that i…
a beta coefficient of zero represents…
the higher an assets beta
nondiversifiable risk
unsystematic risk
is unrelated to the market portfolio
the more responsive it is to changing market returns
Risk that affects all firms is called​…
nondiversifiable risk
The portion of an​ asset's risk that i…
unsystematic risk
22 terms
Corporate finance
Profit margin
Return on assets
Earnings per share
Price earnings ratio
Net income/Sales
Net income/ Total assets
Dollar value of income earned per share outstanding. ... Net inc…
Indicates investors expectation of financial growth in the fu…
Profit margin
Net income/Sales
Return on assets
Net income/ Total assets
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