Mid-term studyguide_50% - Arizona State University FIN 300 Fundamentals of Finance Mid-term Study guide 1 Overview of Financial Management Be able to

Mid-term studyguide_50% - Arizona State University FIN 300...

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Arizona State University FIN 300- Fundamentals of Finance Mid-term Study guide 1. Overview of Financial Management Be able to identify the three main forms of business organization and describe the advantages and disadvantages of each one. Be able to explain the primary goal of the management of a publicly held corporation Differentiate between what is meant by a stock’s intrinsic value and its market value and understand the concept of equilibrium in the market. Be able to discuss the conflicts between managers and stockholders, and explain useful motivational tools that can help to prevent these conflicts (Managerial compensation plans, Direct intervention by shareholders, the threat of firing, and the threat of takeover) 2. Financial Statements Know the fundamental or Balance Sheet accounting identity. Assets= Liabilities + Shareholder’s Equity. Understand that Liabilities = Debt, Shareholder’s Wealth= Total Equity= Common Equity= Owner’s Equity . Be able to diagram and understand the relationships between the balance sheet, the income statement, and the statement of cash flows Balance Sheet Thoroughly understand what a balance sheet tells us as well as the basic structure of a balance sheet (know that the Assets portion of the balance sheet is divided between Current assets and Long Term Assets ( Fixed Assets such as Plant & equipment), while the Liabilities is made up of current liabilities and long term liabilities and the equity is usually formed with retained and common equity/shareholder’s equity ). Know the difference between a Balance Sheet and an Income Statement ( Note that a balance sheet represents a point in time/snapshot of the fir’s financial position) . Be able to identify examples of current assets, long-term assets, current liabilities, and long-term liabilities. Be able to understand that shareholder’s equity is the difference between Total Assets Total Liabilities. Understand the concept of working capital.
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