Flash Card #1

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

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
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
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

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

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online