Term
| Role of the financial manager: |
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Definition
Maximize the current value per share of existing stock
Make money or add value for the owner: avoiding financial stress, maintain steady owners growth |
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Term
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Definition
Mixture of debt and equity to get the investments
Raise money for the firms, borrow, or issue stocks |
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Term
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Definition
| The process of planning and managing the firm’s long-term investments |
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Term
| Working Capital Management: |
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Definition
Day to day, accounts receivable, sufficient resources to continue in the quiz
Short-term assets and liabilities (cash or use credit) |
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Term
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Definition
Business owned by one person
Liability is unlimited business is taxes as personal income |
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Term
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Definition
Business formed by two or more individuals or entities
General and Limited Liability set in partnership agreement Income is taxed as personal income to partners |
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Term
| Primary disadvantages of Sole Proprietorship and Partnership |
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Definition
Unlimited liability
Limited life of the business
Difficulty transferring ownership
Hard to raise, limited ability to grow |
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Term
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Definition
Legal person composed of one or more liabilities are separate and distinct from each other
Article so incorporation and a set of bylaws |
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Term
| Advantages of a Corporation |
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Definition
Limited Liability
Ability to raise capital
Unlimited firm life |
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Term
| Disadvantage of a Corporation |
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Definition
| Double taxation, money paid out stockholders in the form of dividends is also taxed |
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Term
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Definition
| Conflict of interest between the corporation’s shareholders(principal) and manager(agent). Resolve: Compensation, bonus, stock options. |
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Term
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Definition
| The law passed to insure of the accuracy and reliability of published financial information. Protects investors from corporate abuses. Government’s response to management greed and abuses. |
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Term
| Disadvantage of Sarbane Oxley: |
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Definition
| Some firm refused to publish their financials, very expensive to implement, pushed back from many firms. |
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Term
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Definition
| Grants an individual the right to vote on behalf of shareholders |
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Term
| Primary Market transaction: |
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Definition
Sale of a new share of stock to an individual investor
Investor who purchases new security |
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Term
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Definition
Stock market transaction
Investor who resells |
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