Finance MBA30 May/June

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Author:
maylott
ID:
302131
Filename:
Finance MBA30 May/June
Updated:
2015-05-11 21:52:59
Tags:
Finance
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Description:
Finance
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  1. Financial asset
    •a security representing a claim to income. Two principal types:

    –Share (Stock)—ownership interest in  company...Entitled to share of the firm’s profits, either in dividends or future growth

    –Bond—debt interest in company...entitled to interest and repayment of principal
  2. Share (Stock)
    • –ownership interest in  company •Entitled to share of the firm’s
    • profits, either in dividends or future growth
  3. Bond
    • –debt interest in company
    • -entitled to interest and repayment
    • of principal
    • - Has specific collateral... a debenture is unsecured
  4. Primary Market
    When a company sells shares for the first time; company gets money
  5. Secondary Market
    Selling shares second hand... second time they are sold (not from company)
  6. How do you raise equity financing?
    Sell shares
  7. How do you raise debt financing?
    sell bonds
  8. What is internal financing?
    Retained earinings
  9. Accounting vs finance
    Accounting: System of record keeping to report on firms operations

    Finance: process of decision making related to raising money, analyzing results, etc.
  10. Controller
    in charge of accounting department
  11. treasurer
    deals with finance activities
  12. who reports to CFO?
    both the controller and treasurer
  13. Agency problem
    Management (agent) is controlling resources owned by shareholders (principal) and may not make the decisions shareholders want (i.e. management compensation)
  14. How do you manage the "agency problem"?
    • - monitoring mangement (audits)
    • - Tie management bonuses to corporate profit or stock performance.
  15. How is income tax calculated?
    • 1. total income - tax deductions = taxable income
    • 2. taxable income x tax rates = total tax
    • 3. total tax - tax credits = net tax payable

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