Study sets matching "corporate finance"

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Study sets matching "corporate finance"

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
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…
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…
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…
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…
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…
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…
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…
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
Corporate finance
Marginal investor
Equilibrium
Sarbanes-oxley Act
Market price
An investor whose views determine the actual stock price
The situation in which the actual market price equals the int…
A law passed by congress that requires CEO AND CFO to certify…
The stock Value based on perceived but possibly incorrect inf…
Marginal investor
An investor whose views determine the actual stock price
Equilibrium
The situation in which the actual market price equals the int…
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
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
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)
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.
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
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
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
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
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
...
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
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
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
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
62 terms
Corporate Finance
payback period
discounted payback period
profitability index
NPV
-number of years it takes to recover the initial cost of the…
-number of years it takes to recover the initial investment i…
-PV of a project's future cash flows divided by the initial c…
-Net present value is the PV of all the expected future cash…
payback period
-number of years it takes to recover the initial cost of the…
discounted payback period
-number of years it takes to recover the initial investment i…
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…
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
Corporate Finance
ROE
ROA
ROIC
Gross profit margin
NI/SE
NI/TotalAssets
EBIT(1-t)/InvestedCapital
grossProfit/sales
ROE
NI/SE
ROA
NI/TotalAssets
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)
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
Corporate Finance Chapter 1
financial managment
what is another name for financial man…
capital markets
investments
focuses on decisions relating to how much and what type of as…
corporate finance
the markets where interest rates, along with stock and bond p…
decisions concerning stocks and bonds and include a number of…
financial managment
focuses on decisions relating to how much and what type of as…
what is another name for financial man…
corporate finance
Corporate Finance Chapter 2
Financial Institution
Commercial Banks
Investment Banks
Glass-Steagall Act
An intermediary that channels the savings of individuals, bus…
Institutions that provide savers with a secure place to inves…
Institutions that assist companies in raising capital, advise…
An act of Congress in 1933 that created the federal deposit i…
Financial Institution
An intermediary that channels the savings of individuals, bus…
Commercial Banks
Institutions that provide savers with a secure place to inves…
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"
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…
93 terms
Corporate Finance Test 1
4 financial statements
What's included on the statement of ca…
Operating activity
Investing activity
Balance sheet; Income Statement; Owner's Equity and Cash flows
Operating activity; investing activity; and financing activity
Normal course of business, short term cash
Long-term assets
4 financial statements
Balance sheet; Income Statement; Owner's Equity and Cash flows
What's included on the statement of ca…
Operating activity; investing activity; and financing activity
145 terms
Corporate Finance Midterm Vocabulary
financial statement
income statement
revenue
cost of goods sold
statement that provides an accounting based picture of a firm…
financial statement that reports the total revenues and expen…
income generated from the sale of goods or services provided
an expense generated from the purchase of goods to be resold
financial statement
statement that provides an accounting based picture of a firm…
income statement
financial statement that reports the total revenues and expen…
39 terms
Corporate Finance: Chapter 3
Income Statement
Dividend per share ( DPS)
paid - in capital in excess of par
retained earnings
Provides a financial summary of the firm's operating results…
The dollar amount of cash distributed during the period on be…
the amount of proceeds in excess of the par value received fr…
the cumulative total of all earnings, net of dividends, that…
Income Statement
Provides a financial summary of the firm's operating results…
Dividend per share ( DPS)
The dollar amount of cash distributed during the period on be…
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…
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
38 terms
Corporate Finance Lecture 1
What is the pecking order perspective
What is the idea behind the pecking or…
Equity financing over the firm's life…
Private equity finance types (2)
Firms tend to finance their projects first with retained earn…
Information asymmetry - managers tend to issue equity when it…
1. Private equity finance (Venture capital)... 2. IPO... 3. Private…
• Angel Finance - informal market for direct equity finance p…
What is the pecking order perspective
Firms tend to finance their projects first with retained earn…
What is the idea behind the pecking or…
Information asymmetry - managers tend to issue equity when it…
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…
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
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…
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
21 terms
Corporate Finance
How is Capital Raised in a Corporation…
Equity (when does the s/h get paid, wh…
Types of Equity/Shares (2 types)
Equity/Shares (Common Shares) ... * what…
Equity or Debt
the s/h is a residual s/h, so ONLY when the corporation profi…
Common Shares or Preferred
Common Shares - (A) have voting rights AND (B) have a right t…
How is Capital Raised in a Corporation…
Equity or Debt
Equity (when does the s/h get paid, wh…
the s/h is a residual s/h, so ONLY when the corporation profi…
Corporate Finance FINAL
WACC
adjust, project
systematic
greater
the weighted average of the firm's cost of equity, preferred…
If the risk of an investment is different than the firm's ris…
The beta of a security provides an estimate of the __________…
The beta of the common stock of a levered firm is ________ th…
WACC
the weighted average of the firm's cost of equity, preferred…
adjust, project
If the risk of an investment is different than the firm's ris…
35 terms
Corporate Finance- Chapter 7
Coupon
Face Value
Maturity
Yield to Maturity
The stated interest payment, in dollars, made on a bond each…
The principal amount of a bond that is repaid at the end of t…
The specified date on which the principal amount of a bond is…
The rate of return required by investors in the market for ow…
Coupon
The stated interest payment, in dollars, made on a bond each…
Face Value
The principal amount of a bond that is repaid at the end of t…
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