Lecture 3.1

Question 1

an arrangement in which the utilization or operation of an asset is delegated

Answer 1

agency

Question 2

is making decisions that impact money spent or earned by a firm

Answer 2

Financial Management

Question 3

Deciding to invest a firm’s capital in long-term projects/assets

Answer 3

Financial Management

Question 4

Deciding to invest a firm’s capital in long-term project/assets

Answer 4

Capital Budgeting

Question 5

the form or the investments in the firm by its investors (debt or equity

Answer 5

Capital Structure

Question 6

Deciding on the uses and sources of short-term money

Answer 6

Working Capital management

Question 7

snapshot of what a firm owns or owes in a specific point of time

Answer 7

balance sheet

Question 8

a recording of performance over a period

Answer 8

Income statement

Question 9

anything that is expected to generate a cash inflow in the future

Answer 9

Asset

Question 10

Anything that is expected to generate a cash outflow in the future

Answer 10

Liability

Question 11

The difference between the value of the assets and liabilities

Answer 11

Equity

Question 12

monies owed to our firm for credit sales we have made

Answer 12

Accounts receivable

Question 13

Goods owned by the firm specifically for the purpose of resale

Answer 13

Inventory

Question 14

real assets

Answer 14

PPE

Question 15

stocks bonds, mortgages, loans

Answer 15

Financial Assets

Question 16

the speed and ease with which an asset can be converted to cas

Answer 16

liquidity

Question 17

monies owed to a supplier or vendor for products we purchased on credit

Answer 17

Accounts Payable

Question 18

financial obligations due within the year

Answer 18

Current Liabilities

Question 19

financial obligations due in more than one year

Answer 19

Long-term debt

Question 20

cash paid in by the owners of the firm

Answer 20

commonstock

Question 21

cumulative account profits earned by a firm but not paid to owners as dividends

Answer 21

retained earnings

Question 22

the book value of a firm’s equity is negative

Answer 22

technical default

Question 23

the market value of equity can never be less than zero

Answer 23

limited liability

Question 24

material costs, labor/wages

Answer 24

cost of goods sold

Question 25

advertising expenses office secretarial expenses, managerial salary

Answer 25

overhead

Question 26

earnings before interest taxes depreciation and amortization

Answer 26

EBITDA

Question 27

an income statement expense that does NOT represent a cash flow

Answer 27

Non-cash item

Question 28

an approach to calculating deprecation that combines straight-line deprecation and double declining balance methods

Answer 28

Modified Accelerated Cost Recovery System (MACRS)

Question 29

the historical cost of an asset less accumulated depreciation

Answer 29

net fixed assets

Question 30

the sum of all previous depreciation expens

Answer 30

accumulated depreciation

Question 31

the accounting value of an asset

Answer 31

book value

Question 32

a firm’s shares of common stock that are available for purchase from the stock market

Answer 32

Shares outstanding

Question 33

cash payment to our shareholders/owners

Answer 33

dividend

Question 34

selling a fixed asset at its current market value

Answer 34

salvage