MGMT_130_Lecture_1

MGMT_130_Lecture_1 - MGMT 130 Lecture 1 What is a firm? How...

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MGMT 130 Lecture 1 What is a firm? How is a firm financed? How is a firm structured? What is the purpose of a firm? Overview of financial markets
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What Is a Firm? A collection of assets that have been financed by liabilities and are used to fund projects that generate cash flows . Assets: current assets (short-lived, inventory, receivables, cash); fixed assets (long-lived, land, buildings, machinery); intangible (patents, intellectual property).
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Liabilities: obligations to others. Current liabilities: accounts payable, short-term loans, etc. Less than 1 year. Long-term debt: bank debt or bonds with greater than 1 year maturity. Shareholders equity: residual claims on the value of a firm. Total assets always equal total liabilities. Book value of shareholder’s equity is calculated as total assets minus total (other) liabilities. Why might market value of shareholders equity not equal book value?
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Projects are the activities of a firm that spin
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MGMT_130_Lecture_1 - MGMT 130 Lecture 1 What is a firm? How...

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