Risk and Return
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1. Explain the relation between risk and return.
2. Describe the two components of a total holding period return, and calculate this
The Time Value of Money
1. Explain what the time value of money is and why it is so important in the field of
2. Explain the concept of future value, including the meaning of principal amount,
simple interest, and co
Discounted Cash Flows and Valuation
1. Explain why cash flows occurring at different times must be discounted to a
common date before they can be compared, and be able to compute the present
value and future value for multip
Bond Valuation and the Structure of Interest Rates
1. Explain what an efficient capital market is and why market efficiency is important to
2. Describe the market for corporate bonds and three types of cor
12.1 Introduction and objectives
Capital is a scarce resource in any business and enormous attention is given to
ensuring the right sources of finance are found and properly utilised with respect
to the long-term non-curre
The Financial Environment and the Level of Interest
1. Discuss the primary role of the financial system in the economy, and describe the two
basic ways in which fund transfers take place.
2. Discuss direct financing and
Financial Statements, Cash Flows, and Taxes
1. Discuss generally accepted accounting principles (GAAP) and their importance to the
2. Know the balance sheet identity, and explain why a balance sheet must balance.
The Financial Manager and the Firm
1. Identify the key financial decisions facing the financial manager of any business
2. Identify the basic forms of business organization used in the United States, and
review their re
Working Capital Management
Define net working capital, discuss the importance of working capital management,
and be able to compute a firms net working capital.
Define the operating and cash cycles, explain
Analyzing Financial Statements
1. Explain the three perspectives from which financial statements can be viewed.
2. Describe common-size financial statements, explain why they are used, and be able
to prepare and use them to a
The Cost of Capital
Explain what the weighted average cost of capital for a firm is and why it is often
used as a discount rate to evaluate projects.
Calculate the cost of debt for a firm.
Calculate the c
The Fundamentals of Capital Budgeting
1. Discuss why capital budgeting decisions are the most important decisions made by a
2. Explain the benefits of using the net present value (NPV) method to a
1. List and describe the four types of secondary markets.
2. Explain why many financial analysts treat preferred stock as a special type of bond
rather than as a true equity security.
3. Describe how
Cash Flows and Capital Budgeting
1. Explain why incremental after-tax free cash flows are relevant in evaluating a project,
and be able to calculate them for a project.
2. Discuss the five general rules for increm
LinkedIn Corporation (Financial Ratios)
Quick ratio (Acid Test)
Efficiency Ratios (Asset Mgmt.):
Days sales in inventory
Accounts receivable turnover(FINRA)
Days sales outstanding
Fin 2660-51-Ratio Analysis Project
Ratio Analysis Project (LinkedIn Corporation #1)
LinkedIn Corporation (LINKD) was founded in 2002 and became a publicly traded company on
the NYSE in 2011. It is the world's largest professional network
Third Take-Home Test Chapter 7
1. Which of the following global entry strategies is being used if a company collaborates with a competitor on a globally
based opportunity for mutual benefit, but the competitors do not invest in each other?