6_Cost of Capital

6_Cost of Capital - Where have we been Operating Financing...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Where have we been… Operating, Financing & Investing business activity Introduce the Balance Sheet, Income Statement and Cash Flow Statement * A=L+E; Ending RE= Beg. RE + NI – Div Decl. * NI=Revenue - Expenses + Gains - Losses * ∆CA =∆L+∆E - ∆NCA Accrual Accounting framework * Historic cost basis * Revenue & Expense recognition Objectives Introduce some Financial Statement Analysis tools and concepts Agenda MC 2 Cost of Capital User perspective Risk & Return – where to begin Approach & Tools Take-Aways Financial Statement Analysis Cost of capital - ? * A/P
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
* Debt * Equity Implications?? Financial Stmt Analysis Depends on Goals of User Creditors (short-term): suppliers, banks, etc. Creditors (long-term): bondholders, employees, lessors, etc. Equity holders Assessing Risk & Return (Constrained optimization – limited capital to allocate) Will the expected Return compensate for the risk taken? Expected return estimated from evaluation of past performance and forecasted future performance. Where to begin: The Big Picture To be able to interpret any financial analysis – one needs context * Understanding the Economy (Inflation, interest rates, Growth) * The industry (economics, competition etc) * Firm’s strategy
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern