Name the four basic areas and what they do?
- 1. Corp Finance - financial statement, analysis, cash flow, budgeting
- 2. Investment - rate pricing , risk and reward, portfolio mgmt
- 3. financial Institutions - banks, credit unions, insurance co, stock and bonds brokage, real estate, investment banks
- 4. International Finance - currency exchange rates, international loans, currency valuation
Name FINC Management Titles?
- CFO, controller, comptroller (old english), financial analysis, financial advisor, financial manager, cpa
- wealth manager, treasurer
Capital structure theory?
the mixture of debt and equity in a company
Define "stand by line of credit"?
- Just like a charge card. They can call up anytime
- to get more money.
Define - Commitment Fee?
Banks get a "Commitment Fee" just to keep the money of the reserve for Mc
Capital budgeting for?
long term assets - such as land, plant, equipment
Working capital management
for short term assets - such as cash, inventory, accounts receivables, marketable securities
Name 3 forms of business organization?
- Proprietorship - about 75% of the existing 21 million - 6% of sales - 27% of national profit - Unlimited Liability
- Partnerships - 6% - 4% of sales - 3% of national profit - Shared Liabilty
- Corporations - 19% - 90% of sales - 70% of national profit - No Liabilty (* value of stock could be a Liabilty)
When was the Period of Economic Expansion?
- Early 1900's: - Mergers, acquisitions, creation of new financial instruments (documents)
- there was alot of oil and steel, plants were starting up,
what yr was the The Great Depression?
1930 - Preservation of capital, liquidity management, reorganization
what happened in 1950?
- Post WW 2 - expansion of college education resulting from "GI bill" educational benefits
- - GI Bills also provided low mortgage rates.
what is our current state called?
Capital structure Theory, Globalization
Goals of financial Management:
- - Maximize current value per share of stock. * The top reason!!
- - Profit
- - Maximize Profit
- - Survival out of a recession
- - Expansion
- - Beat the competition
- - Increase market share
- - Minimize expenses
- - Steady Earnings growth
Two reasons for owning stock ?
- 1. Dividends
- 2. Capital appreciation - ex) buy at $10 per share and see it at go to $20 per share
define Relationship of financial Management?
- Working relationship in which the principal is represented by an agent to act on their behalf
- must focus on the shareholders is top priority for the company
- Ex)Ford in 2006 hired Alan Mulally as CEO , 23.6 billion dollar loan.
anyone that has an interest in the operation of that company
Define the financial Markets all 8 of them?
- financial Markets - 8 of them
- 1. Money market - financial instruments / docs with a materity less than one yr. such as a treasury bill
- 2. Capital market - financial instruments with a materity greater than one yr. such as treasury bond
- 3. Private market - The original sale of a financial instrument from Issuer to investor
- 4. Secondary market - all subsequent sale of a financial instrument
- 5. Private market - the offer for sale is made to one or to a very small num of investors . Ex) ferris and IBM purchase
- 6. Public market - the offer for sale is made to many num of investors (The public)
- 7. Spot market - the sale of a financial instrument at the then current market price, for immediate delivery. (usually commodities like oil for refineries)
- 8. Futures market - the sale of a financial instrument at the price set today, for the delivery at a future date.