L9 - Corporate Finance Flashcards
What is a sole trader
They own all assets and are responsible for all risks, obligations and debts.
What is partnership and joint venture buisness
Buisness with more than one person. They combine overseas capital or expertise with buisness networks and ownership of recourses.
What is a company?
They must have a registered name with the companies office, 1 or more shares, 1 or more shareholders and 1 or more directors
What are the shareholders
Owners of the company
What are the board of directors
Board composed of directors elected by the shareholders.
What is the advisory board
A committee selected by the board to provide defined advice and info to the board and management. They have no powers and owe no duties as directors of the company
Who are the top management
CEO, COO, CFO etc
How do you combat agency problems
Compensation plans,
Board of directors,
Takeovers
Monitoring
What is accounting
preperation of accounting records, preparing, analysing and interpreting financial statements
What is Economics
The study of choices by people faced with scarcity
Finance consists of….
Investments, the decisions of institutions as they choose to invest and managerial finance which involves the actual management of the firm.
What is the role of the financial manager
project decisions, invest in research and development, invest in marketing, issue shares, borrow, hedging, futures, short term decisions
Future Value = ….
Present Value x (1 + r)^t
What is the Net Present Value rule
managers increase shareholder value by accepting all projects worth more than they cost.
What is the payback period
time until cash flows recover the initial investment of the project
