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Notes-060810 - BUSINESS FINANCE 170.02 CAMPSEY JUNE 8...

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B USINESS F INANCE 170.02 C AMPSEY – J UNE 8, 2010 - - - - - Midterm 5 th class, not at beginning of class July 7 th can come in and ask questions Quiz every day (after class) 12 ?'s; can miss 2 and still get perfect score encourage you to keep up; come to class Need calculator (simple, 4-fn is enough); don't need financial calc, or graph calc Reader (Maple Press) is only $8 Final on last day of class 7 Quizzes (7 classes left for lecture) if fail every quiz, but make A's on exams, then A in class not punitive, but guide to taking exams BT 960, 2-3 p.m. Office Hours Final is 75% of grade If have 90+ = A in class 3 (or 4) things need to do to pass this class: 1.) complete assignments independently and on time (can work w/someone else) 1. don't take course reader and look at answers 2. don't depend on other people 2.) attend class proactively 3.) * Ask questions !!!* Free to leave after quizzes Breaks on the hour (9:15, 10:15, etc.) 15 min. breaks - - - - - Topic: Basic Income Statement and Balance Sheet (Time Value of Money and Forecasting) Most liquid of our assets CASH liquidity – ability to convert asset into cash at its value e.g. if sell house, and drop price, can sell, but doesn't want to cannot find buyer at current value, so not very liquid price that matches value of that A/R Inventory – mat'l that we are prod'ing service economy = U.S. easier to think about mfg (buying machine, putting raw mat'ls in machine, cranking out prod and selling that prod, customer pay and get cash); use mfg metaphor even tho service dominated econ CASH (most liquid) + A/R + Inventory (least liquid, since almost always last of current assets) = C.A. (current assets) Gross fixed assets (GFA)
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Accum Dpr Net fixed assets (Net FA) Book talks about F.A. (fixed assets) = net of dpr C.A. + F.A. = T.A. (total assets) RH-side of balance sheet A/P (Accts payable) N/P (notes payable) Accruals C.L. (current liabilities) A/P : informal b/c good customer paying off in past N/P :: formal version of A/P; if firm not paying on time, sign contract to pay at particular time Accrual ::: build up of debt; if working, paying off during wk, accrual builds up of what you're owed; if biz, pay taxes every qtr, building up tax liability building up of a liability; most firms (other than in CA) will pay once a mo. (in Cali, once a wk); biz gets to use $$ for extra 2 wks (esp lg firms) Assets turned into cash short-term debt (current liabilities) L-T debt (bank loan [5-10 yrs], loan frm another financial intermediary, bond [most e.g.'s in text], can borrow frm any financial intermediary, get long-term financing) preferred stock (pfd stock) – some characteristics of debt and some of equity equity in that not owner's debt owner's equity [net worth] common stock indicated by par value paid-in-capital retained earnings make up total claims of the firm [Total Claims] or Total Liability + Equity (spend almost no time w/pfd stock b/c most firms don't have any) common stock + p-i-c = initial investment owners make in firm
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