current assets and current liabilities
Net working capital
the difference between current assets and current liabilities
the amount of working capital an organization keeps on hand relative to its
potential working capital
The cost of capital for an investment project is:
a. The rate of return from the project.
b. The only acceptable rate of return on the project.
c. The minimum acceptable rate of return on the project.
d. The rate of return that maximizes the value of the
A method of analyzing financial statements that looks at the percentage
change in a line item form year to the next
*(current year - previous year/previous year) 100= percentage change
A type of horizontal analysis t
How many times did we sell inventory that we have?
Asset Efficiency Ratios
Day Sales Outstanding (DSO)
Total Asset Turnover
Total revenue/ Ending A/
commercial banks and businesses
-generally take out short-term loans
-banks are generally not willing to offer a large multi-million dollar loan to
businesses b/c too much risk
a depository institution owned by depositors who have a common
The management of money by organizations that operate in the financial
-banks, brokerage firms, etc.
Those who work in places of financial service.
provide services that help people decide where and how to invest their
Security Market Line, SML, Equation
An equation that shows the relationship between risk as measured by beta
and the required rates of return on individual securities
A Document giving one person the authority to act for another, typically the
Th chance that some unfavorable event will occur.
Stand Alone Risk
Risk an investor would face if they held only one asset.
a listing of all the outcomes of an experiment and the probability associated
with each outcome
The specified number of dollar of interest paid each year
Coupon interest rate
The stated annual interest rate on a bond
A bond whose interest rate is fixed for its entire life
a bond whose interest rate f
the investment opportunities in productive (cash-generating) assets.
Time Preference For Consumption
The preference of a consumer for current consumption as opposed to saving
for future consumption.
in a financial marke