Chapter 1: Financial Statement Flashcards
What is the goal of Financial Management
Profit Maximization
Funding
Money provided, especially by an organisation or government, for a particular purpose
Production
The action of making or manufacturing from raw components or raw materials, or the process of being manufactured
Sales
The exchange of commodity for money, the action of selling something
Profit
A financial gain by the difference between the amount earned and the amount spent in buying, operating or producing something
Dividends
A sum of money paid regularly by a company to its shareholders from its profits
Stocks
An equity instrument carrying ownership interest
Bonds
A debt instrument with a promise to pay back the money with interest
What type of return do you receive when buying a stock of a company?
Dividends
What type of return do you receive when buying a bond from a company?
Interest
Is there a return guarantee when purchasing a stock?
No
Is there a return guarantee when purchasing a bond?
Yes (Unless bankruptcy is declared)
What additional benefits does someone with stock over a company receive?
Voting rights in the company
What additional benefits does someone with a bond over a company receive?
Preferential treatment when bond matures
Are company bonds, generally speaking, considered low risk or high risk?
High risk (generally)
