Financial Management Concepts Flashcards
1
Q
Weighted-average cost of capital (WACC)
A
1.Cost to the firm for its long-term financing
2.minimum the firm must earn on its investments
The Lower WACC the lower required revenue needed to earn a profit and easier to increase shareholder value
2
Q
Level 1
A
Quoted Market Prices in active markets for identical assets / liabilities
3
Q
Level 2
A
Quoted price for similar assets or liabilities in active markets
Quoted price of identical assets or liabilities in markets that are inactive are used for valuing an item
4
Q
Level 3
A
Inputs are unobservable and based on an entity’s assumptions
5
Q
Delphi Method
A
Qualitative forecasting method that involves development of a consensus by a group of experts using a multi-stage process to converge on a forecast (Long-term forecasting)
