Finance Full Notes - Finance Notes Wednesday 1/17/07 -3...

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Finance Notes Wednesday 1/17/07 -3 exams: try to arrive 30 minutes early -100 points each x 3 = 300 points total -5 online quizzes (best 4/5) Bigcharts.marketwatch.com o Good to see stocks DJIA=Dow Jones Industrial Average average of 30 stocks o Largest firms NASDAQ=National o Over the counter stocks o Dealers put in order for stocks here o Securities Maximize Shareholder’s Wealth o Maximize current share price Primary Market—company receives proceeds from sales Secondary Market—I buy it with the idea that I will sell it to make a return o O What is short sale? wners exchange securities Short sale?
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Monday 1/22/07 - Lan: this is good to practice! Quizzes: start at 1pm on Thursday -last sign in at 6pm on Friday -www.mhhe.com/rwj -student edition files with practice exams Agency Problems: Person doesn’t own lots of shares but controls all the money Do I consume perks that are unnecessary? o Get airplane for 40 mil. 36 mil has to be paid by stockholders Agency Issues: M What is the importance of agency issues? anagement vs. Shareholders Shareholders vs. Bondholders o Bondholders want more Safety o Stockholders want Risk, want Control -how do you make both parties happy? with advisors there can be a conflict of interest
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Financial Statements Balance Sheet = snap shot on a particular date o T. Assts = L + SE Relationships: o T. Assts = T.L. + SE o T. Assts – T.L. = SE Book Value vs. Market Value Common stock = par value APIC = additional paid above par value Net Working Capital = C. Assts – C. liabilities GAAP Income Statement = for a POT-end Dec. 31 Sales revenue (aka. NET SALES) Less: CGS Gross profits Less: Operating expense Selling expense General and administrative Lease expense Depreciation expense Total operating expense Operating profits (aka. EBIT: Earnings before interest and taxes) Less: Interest expense Net profits before taxes (aka. EBT: TAXABLE INCOME) Less: Taxes (rate = x%) Net profits after taxes (aka. NET INCOME)
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Less: Preferred stock dividends Earnings available for common stockholders Dividends paid ($000) Market Price per share Wednesday 1/24/07 -www.cuakpsi.com Cash Flow Why be concerned about cash flow? The Cash Flow Identity:
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o Cash Flow From Assets = cash flow to creditors (bondholders) + Don’t understand cash flow to stockholders (owners) o Cash Flow From Assets = Operating cash flow - Net Capital Expenditures - Change in NWC (net working capital) Income Statement Revenues -CGS -Depreciation EBIT -Interest EBT -Taxes Net income Balance Sheet Current Assets + Fixed Assets = Total Assets -Cash number is what then investors demand -Transform data into cash numbers to see how it affects securities -above interest in net income is operation, below is financing Operating Cash Flow = EBIT + Depreciation – Taxes Net Capital Spending = Ending net fixed assets
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- Beginning net fixed assets + Depreciation o T What are all these equations? his is long-Term
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This note was uploaded on 08/16/2011 for the course ECON 300 taught by Professor Laren during the Spring '11 term at Missouri State University-Springfield.

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Finance Full Notes - Finance Notes Wednesday 1/17/07 -3...

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