Week 7 Terms Flashcards
What is more riskier debt or equity?
Debt since it is funding from creditors
Operating Activities and Current Liabilities
have a direct relationship
A company has liquidity if
it has the ability to pay current obligations
Working Capital =
Current Assets - Current Liabilities
Changes in working capital
directly affects cash flows from operating activites
contingent liability
is a potential liability that has arisen as a result of a past event
Warranty criteria requires
that is both be probable and reasonably estimable
Lessor
party that Owns the asset
Lesse
party that pays the right to use the asset
Installments
similar to bonds but are typically paid back in equal installments
Common stock and ownership
common stock is held by investors who are the OWNERS of a corporation
What to do with no par value stock
increases cash
increases common stock
What to do with par value or stated value stock
increases cash
increases common stock
increases additional paid in capital
Preferred Stock (3 keys)
no voting rights
less risky
fixed dividend rate
Treasury Stock
rebought and being held
no voting
no stockholder rights
