Flash Card #1

Flash Card #1 - Investment Decision(Capital Budgeting...

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Investment Decision (Capital Budgeting Decision) Decision to invest in tangible or intangible assets (Identify investment opportunities) (Analyze and value the opportunities) (Decide whether and how much to invest) Financing Decision The form and amount of financing of a firm’s investments (Raising money that the firm needs for its investments and operations) Capital Structure (The mix of long term debt and equity financing) Real Assets Assets used to produce goods and services Financial Assets Financial claims to the income generated by the firm’s real assets Chief Financial Officer (CFO) Oversees the treasurer and controller and sets overall financial strategy Treasurer Responsible for financing, cash management, and relationships with banks and other financial institutions Controller Responsible for budgeting, accounting, and taxes Corporation A business organized as a separate legal entity owned by stockholders Types of Corporations Public Companies & Private Corporations Types of Business Organizations Sole Proprietorships, Partnerships, Corporations Limited Liability Options Limited Liability Partnerships (LLPs), Limited Liability Corporations (LLCs), Professional Corporations (PCs) Corporation Advantages Separation of ownership and management—this is one distinctive feature of corporations, Limited liability Disadvantages Cost (money and time) is high, Double taxed Partnership and Proprietorship Advantages Only pay personal income tax Disadvantages Traditional partnership has unlimited liability Goals of Corporation Maximize the current market value of shareholders’ investment in the firm (not profit) ∞∞∞∞∞ Future Value Amount to which an investment will grow after earning interest Compound Interest - Interest earned on interest
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This note was uploaded on 11/18/2011 for the course FIN 351 taught by Professor Li during the Fall '09 term at S.F. State.

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Flash Card #1 - Investment Decision(Capital Budgeting...

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