Chapter 1. The market-based economy - Posted

Chapter 1. The market-based economy - Posted - The...

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The Market-based economy Chapter 1 - Part A Finance 357
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Market Based Economy The Phenom Phone Portable book reader (like Amazon’s Kindle) Multimedia Player Pocket PC
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The Company How do we acquire the money we need to run our business? ($10 million) Balance Sheet Total Value of Asset Total Value of the Firm to Investors Current Assets Fixed Assets Current Liabilities Long-term Debt Shareholders Equity Net Working Capital
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Capital Structure Capital Structure – The proportion of financing that comes from debt and equity Example 1 50% debt and 50% equity $5 million in long-term bonds and $5 million in Stock Example 2 80% debt and 20% equity $7.5 million in long-term bonds, $0.5 million in short-term debt and $2 million in Stock
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Terminology Persons or Institutions that buy company Debt are known as Creditors , Debtholders or Bondholders Persons or Institutions that buy company Equity are known as Shareholders Firm Value = B + S Think: Value = Bondholders + Shareholders
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Chapter 1. The market-based economy - Posted - The...

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