Term
| About 75% of all businesses are? |
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Definition
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Term
| What is the accountants primary function? |
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Definition
| The collection and presentation of finacial data |
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| Financial decisions should be made and actions taken only when added benefits exceed added costs |
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| What is the primary goal of a financial manager? |
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| The conflict between the goals of a firm's owners and the goals of its non-owner managers |
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| Gross profits minus operating expenses |
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| EBIT minus interest and tax |
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| Another name for statement of cash flows |
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| Sources and uses statement |
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Definition
| Comparison of different firms' financial ratios at the same point in time |
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| Comparison of current to past performance and the evaluation of developing trends |
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| Which ratios primarily measure risk? |
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Definition
| liquidity, activity and debt |
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Term
| Which ratio measures the activity, or liquidity, of a firm's inventory? |
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| Cash flows associated with the purchase or sale of fixed assets and business interests |
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| What is the key input to the short-run financial planning process? |
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| 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 |
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Character
Capital
Collateral
Capacity
Conditions |
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| The annual rate of interest actually paid or earned. |
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Definition
| Expect higher rates of return with increased risk |
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Definition
| The extent of an asset's risk. Found by subtracting the pessimistic outcome from the optimistic outcome. |
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Definition
| maximizes return for a given level of risk |
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| Capital Asset Pricing Model |
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Definition
| Relationship between non-diversifiable risk and return for all assets. |
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Definition
| Present value of all future cash flows an asset is expected to provide over a relevant period of time |
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| Key Inputs of Valuation Process |
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Definition
| Cash flow, cash flow timing, and risk |
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Term
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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 |
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