Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
27 Cards in this Set
- Front
- Back
Sarbanes Oxley Act of 2002 (4)
|
1. no more self regulation: established Public Accounting Oversight Board
2. limits non-audit activities: allows consulting, but must be approved 3. audit committees (some directors of firm) have more requirements: whistle-blower, must have one accounting expert, audit committee (not management) chooses auditors 4. CEOs and CFOs must sign financials |
|
5 factors for choosing the best form of business
|
1. personal liability
2. taking profits 3. how taxes paid 4. raising capital 5. control |
|
short term uses of funds (3)
|
buy inventory
pay for operations (wages) extend credit (accounts receivable) |
|
short term sources (5)
|
1. trade credit (no cost)
2. line of credit (borrow from bank for a month or so) 3. secured loan (ex: car dealership floorplan) 4. FACTORING (take copies of invoice to factor, and factor will pay invoice from manufacturers) best for furniture and clothing 5. "commercial paper" (firms loaning $ to other firms) |
|
long term uses of funds (4)
|
-buy fixed assets (PPE)
-Make an acquisition (buy another firm) -change capital structure (issue bonds, use money to buy back some shares of stock) |
|
long term sources (3)
|
-retained earnings
-debt (ex: leasing, bonds) -equity (ex: venture capital, preferred stock: stock before sold to public) |
|
angel investors
|
invest small amts of $ to get company going in return for shares
|
|
simple interest
|
1000 x interest rate = future
|
|
"present value" formula
and why is it important |
F= P x (1+r)^t
convert everything to "now" time |
|
Net Present Value Rule
and why is it important |
-select project with biggest NPV
convert future inflows to present time, and subtract investment needed |
|
Rule of 72
|
the number of years it takes to double a sum of money
doubling time = 72/interest rate |
|
Annual Percentage Rate (APR)
|
interest rate on loans and saving accounts usually stated in this form with a certain frequency of compounding
|
|
Effective Annual Rate (EFF)
|
used to make interest rates comparable
EFF= FV at the end of the year per dollar - 1= (1.004)^12 - 1. or EFF= (1+ APR/m)^m -1 |
|
what happens to the price of "fixed income streams" when market rates fall?
|
it rises
|
|
key interest rates
|
1. 10 year treasury note: 5%
2. 6 month treasury bill: 4.9% 3. 6 month certificate of deposit: 4.5% 4. "tax exempt" (typical) shorting stocks: 4.22% 5. commerical paper: 3.87 6. "money market": 2.7 7. checking account interest= 1.25 |
|
risk premium
|
the extra interest that companies pay investors above the gov't interest rate.
|
|
total return
|
interest + appreciation
|
|
P/E Ratio
|
current stock price/ annual earnings per share
|
|
breakeven point
|
fixed cost/contribution
|
|
contribution
|
selling price-variable cost
|
|
accrual
|
revenue - expenses
|
|
net income
|
income (profit) - tax (corporate income tax)
|
|
double taxation:
the interst paid on bond is a ________. does it show up on income? therefore it is ____ _______________. |
interest paid on
|
|
are dividends counted as expenses? what does this mean
|
no. so means taxed at corporate level
|
|
ALE
|
Assets = Liabilities + Equity
|
|
current assets (3)
|
1. accounts receivable
2. merchandise inventory 3. pre-paid expenses |
|
owner's equity
|
1. paid in capital: additional $ invested by owners
2. retained earnings |