Term
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Definition
| unincorporated business owned by one individual |
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Term
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Definition
| unincorporated business owned by two or more persons |
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Term
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Definition
| legal entity created by a state |
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Term
| Limited Liability Partnership (LLP) |
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Definition
-A partnership form of business that provides for limited liability for some partners
-At least one partner must be a general partner who is fully responsible for the firm's liabilities |
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Term
| Limited Liability Company (LLC) |
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Definition
-Provides for limited liability for owners
-Taxed like a partnership or corporation
-Flexible ownership structure |
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Term
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Definition
| Proprietor, report income |
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Term
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Definition
| Partner, report income (agreement or no agreement) |
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Term
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Definition
| Shareholders, Article of Incorporation, Corporate Bylaws, 10k, 10Q |
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Term
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Definition
| Members, Articles of Organization, Operating Agreement |
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Term
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Definition
| Partners, Certificate of Limited Partnership, Partnership Agreement |
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Term
| Principal/Agency Relationship |
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Definition
-Owner/principal hires an agent and delegates decision-making authority to that agent to act on behalf of the principal
- Broker, Lawyer, Incorporator, CEO |
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Term
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Definition
- Pay linked to long-term performance
- Executive stock options |
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Term
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Definition
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Term
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Definition
- Can't vote on everything
- Activist shareholder
- Board elections, shareholders initiatives |
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Term
| Annual and Quarterly reporting required by SEC (10K, 10Q) |
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Definition
- Balance Sheet
- Income Statement
- Statement of Cash Flow
- Statement of Stockholder's Equity |
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Term
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Definition
- A statement of the firm's financial position at a specific point in time
- Found in 10K and 10Q
- Also typically in annual report
- Less formal shareholder's document |
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Term
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Definition
| Items that bring economic benefit |
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Term
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Definition
| Account, Notes, Bonds paybable |
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Term
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Definition
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Term
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Definition
- Reducing the value of an asset over time (useful life)
- Known as non-cash expense
- Tax advantage (spread out tax liability)
- Better estimate of value of company assets
- To zero or salvage (residual) value |
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Term
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Definition
| Estimated market value at end of use |
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Term
Straight Line
(most common) |
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Definition
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Term
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Definition
-Good for delayed cash-flow projects
- Most tax shelter now |
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Term
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Definition
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Term
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Definition
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Term
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Definition
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Term
| Breakdown of equity account |
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Definition
-Common stock (stated price when issued)
- Paid-in capital (amount received from IPO and secondary sale)
- Retained earnings (Net Income adds to this account) |
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Term
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Definition
| A statement summarizing the firm's revenues and expenses over an accounting period, generally a quarter or a year |
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Term
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Definition
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Term
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Definition
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Term
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Definition
-Operating+gains-losses-taxes
- Total earned by business (but not cash!) |
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Term
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Definition
| the cash receipts and cash disbursements, as opposed to the revenues and expenses report for computation of net income, generated by a firm during some specified period |
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Term
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Definition
- Statement reporting the impact of a firm's operating, investing, and financing activities on cash flow over an accounting period
- Net Income is adjusted for actual cash flow (EX depreciation expense is added back in)
- Debt increase is a cash inflow (got money from financing) |
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Term
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Definition
| an asset that can be easily converted into cash without significant loss of its original value |
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Term
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Definition
| ratios that relate the firm's cash and other assets to its current liabilities; indicated how well a firm can meet current obligations |
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Term
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Definition
-How efficiently a firm uses assets
- ratios give how much a firm made as a percentage of sales, assets, or equity |
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Term
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Definition
| How quickly a firm generates sales from assets, accounts, or inventories |
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Term
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Definition
- Measures the amount of debt a firm chooses to finance operations with
- High debt=High leverage
- Leverage magnifies gains and losses
- High leverage is high risk |
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Term
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Definition
- Give information based on share price of stock
- Valuable to find if a stock is "cheap" or "expensive"
- Meaningless to compare across companies |
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Term
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Definition
- ROE=Profit Margin X Asset turnover X leverage
- How much you make times how much you turned over is ROA
- You can see that leverage magnifies gains and losses |
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Term
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Definition
- An analysis of a firm's financial ratios over time
- Used to determine improvement or deterioration in its finanical situation |
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Term
Comparative Ratio Analysis (Benchmarking)
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Definition
| An analysis based on a comparison of a firm's ratios with those of other firms in the same industry |
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