Finance Final Review

Finance Final Review - Finance Final Review Chapters 1-13...

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Chapters 1-13 BCOR 2200 Fall 2008 Chapter 1: I. Four Basic Areas of Finance: a. Corporate Finance i. Capital Budgeting – Do a proposed project? - You have an idea – Will it make $? - Will the idea “increase the firm’s value” - How many units can we sell? (Marketing) - How much will it cost to make the units? (Operations) ii. How do you pay for the project? (3 choices) Capital Structure 1. Sell a piece of the company (sell an equity stake-stock) 2. Borrow the money (sell debt securities-bonds) 3. Retain Earnings (Keep past profits to finance expansion) iii. Working Capital Management 1. Make sure there is enough cash on hand. 2. Too much cash? Payoff ST Debt (Lower interest expense) 3. Not enough cash? Borrow More (Increase Interest expense) b. Investments i. Securities analysis – Which ones should you buy? What are they worth? ii. Portfolio analysis – How do different securities combine into portfolios. c. Financial Institutions d. International Finance – Can deal with currency risk. II. Business Finance and the Financial Manager a. What do corporate financial professionals do? i. Decide if a business is profitable-both old and new. ii. How to pay for new business? iii. Manage the everyday financial activities of the firm 1. Called Working Capital Management 2. Collect from customers, pay suppliers, pay expenses 3. Sell stocks, bonds, commercial paper, borrow from banks III. Forms of Business a. Sole Proprietorship -Owned by one person -Pass-through -Unlimited Liability
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Finance Final Review - Finance Final Review Chapters 1-13...

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