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Managerial Finance
Final Exam Study Guide for FINC 330
30
Finance
08/14/2010

Additional Finance Flashcards

 


 

Cards

Term
About 75% of all businesses are?
Definition
Sole Proprietorships
Term
What is the accountants primary function?
Definition
The collection and presentation of finacial data
Term
Marginal Analysis
Definition
Financial decisions should be made and actions taken only when added benefits exceed added costs
Term
What is the primary goal of a financial manager?
Definition
Maximizing wealth
Term
The Agency Problem
Definition
The conflict between the goals of a firm's owners and the goals of its non-owner managers
Term
Operating Profits
Definition
Gross profits minus operating expenses
Term
Net Profits After Taxes
Definition
EBIT minus interest and tax
Term
Another name for statement of cash flows
Definition
Sources and uses statement
Term
Cross-sectional Analysis
Definition
Comparison of different firms' financial ratios at the same point in time
Term
Time-series Analysis
Definition
Comparison of current to past performance and the evaluation of developing trends
Term
Inflation can distort...
Definition
Inventory costs
Term
Which ratios primarily measure risk?
Definition
liquidity, activity and debt
Term
Which ratio measures the activity, or liquidity, of a firm's inventory?
Definition
Inventory Turnover
Term
Investment Flows
Definition
Cash flows associated with the purchase or sale of fixed assets and business interests
Term
Pro Forma are used for?
Definition
Proft planning
Term
What is the key input to the short-run financial planning process?
Definition
Sales forecast
Term
Judgemental method
Definition
Used to develop a pro forma balance sheet that estimates values of certain balance sheet accounts while others are calcualted.  In this method, the firm's external financing is used as a balancing, or plug, figure
Term
Five C's of Credit
Definition

Character

Capital

Collateral

Capacity

Conditions

Term
FV of an inuity
Definition

PMT

N

I/Y

CPT = FV

Term
Present Value of Annuity
Definition

PMT

N

I/Y

CPT = PV

Term
Nominal Rate
Definition
APR
Term
Effective Rate
Definition
The annual rate of interest actually paid or earned.
Term
Risk-averse
Definition
Expect higher rates of return with increased risk
Term
Range
Definition
The extent of an asset's risk.  Found by subtracting the pessimistic outcome from the optimistic outcome.
Term
Efficient Portfolio
Definition
maximizes return for a given level of risk
Term
Capital Asset Pricing Model
Definition
Relationship between non-diversifiable risk and return for all assets.
Term
Market Value of an Asset
Definition
Present value of all future cash flows an asset is expected to provide over a relevant period of time
Term
Key Inputs of Valuation Process
Definition
Cash flow, cash flow timing, and risk
Term
Bond Valuation
Definition

FV = par value

I/Y = required rate of return (%)

n = years to maturity

PMT = annual interest paid in dollars on par value

CPT = PV

Term
Definition