Term
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Definition
| raising funds for the operations of the company by issuing securities such as stocks/bonds or by borrowing |
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| how the firm will use those monies to fund long-term capital projects |
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| mgmt. of company's short term assets and liabilities |
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Term
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| time a company purchases raw material to the time it collects payment for a final product. has two components; days sales in inventory and days sales outstanding, aka the average collection period |
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| time between the payment of cash for inventory and the receipt of cash from accounts |
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| inventory incurs this in the form of warehousing, obsolescence, and insurance costs. cost rises with increase in current assets. |
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| decrease with increases in current assets. ex. not having enough inventory to meet demand |
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| process of planning and managing a firm's long-term investments |
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Term
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| cost of obtaining financing for the company's capital expenditures |
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Term
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| when the NPV is set to 0 to find the discount rate |
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Definition
| amount of time required for an investment to generate enough cash flow to recover its initial cost |
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Term
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Definition
| issuance of new securities |
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Definition
| trading of existing securities |
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Definition
| upon liquidation or bankruptcy, stockholders are the last investors to receive payment |
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Definition
| an ownership claim that is senior to common stock |
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Definition
| debt issued by an entity that has interest payments and the repayment of principal |
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Term
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Definition
| pay periodic interest payments and also have an option to convert the bond to a shares of stock |
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Term
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Definition
| considered to be below investment grade by the major credit rating agencies |
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Term
| cost of financial distress |
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Definition
| when economic times are tough, interest payments often place severe burdens on companies |
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Term
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Definition
| describes the trade-off between effects of the lower taxes associated w/ the tax deductibility of interest. describes how these two factors fight it out to arrive at an optimal cap. structure |
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