BUS101 FINAL

Description:	BUS101 Capital University MITTLER
Category:	Business
Created by:	Dan Pfeifer on 2009-04-29

Question	Answer
Securities Markets	provides opportunities for businesses and investors
Opportunities of Securities Markets	funds can be raised to finance expsenses, investors can share growth and success of emerging firms
Roles of Investment Bankers	assist/issue new securities, underwrite issues, sells to institutional investors
Advantages of Bonds	no vote, interest is tax deductible, temporary source of funds, can be repaid before maturity date
Disadvantages of Bonds	increase debt, legal obligation to pay interest, rapid maturity rate
Specialty Bonds	Sinking Funds, Callable, Convertible
What is stock?	ownership, certificate, dividens, common vs. preferred
Advantages of Stock	no repayment, no legal obligation, does not create debt
Disadvantages of Stock	voting rights, dividends not-tax deductible, tough to manage
Investment Criteria	1.Risk 2. yield 3. duration 4. liquidity 5. tax consequences
Standards and Poors	provider of independent credit ratings, investment risks, investment information
investing in Stock	consider.... growth vs. income, capital gain vs. dividends, blue chip vs. penny, market order, limit order, stock split
Stock Splits	shares split up to 50%, lower price increases demand, increase in demand increases price, shares go up a very small %, profit made
Mutual Fund	organization that buys stocks and bonds then sells shares in those securities to the public. investors can invest in many companies at a low price
Diversification	buying different types of investments; different bonds, different stocks. reduces overall risk of investment
Junk Bonds	high risk, high interest, debenture bonds that attract risk takers
debenture bonds	unsecured bonds given out only to firms with good reputation
Stock on Margin	investor buys up to 50% the cost of a stock from broker so they can own stock without paying full price
Commodity Exchange	buying and selling precious metals, minerals and agricultural goods
Stock Quotes	% change in YTD $, high/low $, Company and symbol, last dividend/share, dividend yield, P/E ratio, # of shares traded, Closing price, net-change price
Why Money?	economy dependence, money vs. barter, unit of value, electronic cash, money supply, global exchange
Characteristics of good money system	portability, divisibility, stability, durability, uniqueness
The Money Supply	1. currency 2. demand deposits 3. total M1 4. time deposits & money market accts. 5. total M2
FRS (Federal Reserve Structure)	buys, sells govt. securities, foreign currencies, lends money to banks, regulates credit, collects economy data, processes checks
Accounting Vs. Financing	recording data vs. analyzing data and making decisions
8 Responsibilities of Financial Managers	1. Planning 2. Budgeting 3. obtaining funds 4. controlling funds 5. collecting funds. 6. auditing 7. managing taxes 8. advising superiors financially
Why do firms fail?	1. undercapitalization 2. poor control of cash flow 3. inadequate expense control
Financial Managers Ask clients	1. what are your goals? 2. when do you want to reach them? 3. what have you done to progress towards your goals already? 4. willing to take risks? 5. interest in involvement with monitoring
Financial Planning	Forecasting long and short term needs, Budgeting, Establishing financial control
3 Types of Budgets	Capital, Cash, Operating
Capital Budgeting	spending plans
Cash Budgeting	management of cash flow
Operating Budgeting	master budgeting
Financial Needs of Firms	daily operations, credit operations, acquire inventory, capital expenditurs
Debt vs. Equity financing (from a firm prospective)	borrowing and owing money vs. retained earnings within or selling stock
IPO	initial public offering
Promotion	inform and remind a target market about product, persuade them to participate in exchange
Promotion MIX	Personal sales, public relations, advertising, sales promotion
Integrated Marketing Communication	comprehensive use of promotion tools to create a strategy
Advertising	paid or non-paid personal communication through various mediums and identification of sponsor
Propaganda	non-personal communication that does not identify sponsor
Product Placement	putting the product where it can be seen
Interactive promotion	establishing a dialogue between buyer and seller to create a mutual, beneficial exchange
Personal selling	selling face to face
7 steps of Selling Process	1. prospecting and qualifying 2. pre-approach 3. approach 4. presentation 5. answer objections 6. close sale 7. follow-up
trial close	tool used to force finalization of sale. focuses on specific details
5 B2B selling steps	1. approach 2. ask questions 3. presentation 4. close sale 5. follow up
Public relations	listen to public, change policies and procedures, inform people that you're responding to their needs
Publicity	information distributed via the media. not controlled or paid for by sponsor
sales promotion	sampling, word of mouth
Push strategy	convince wholesalers and retailers to stock merchandise so customer walks in, sees it, buys it
Pull strategy	heavy advertising and promotional efforts so that customer request product from retailers
6 Accounting cycle	1. analyze source documents 2. recording data in journal 3. transfer data to ledger 4. take a trial balance 5. prepare financial statements 6. analyze financial statements
3 Financial statements	1. Balance Sheet 2. Income Sheet 3. Cash flow statement
Balance sheet	financial condition on specific date
Income sheet	summary of revenues, costs of goods and services for a specific period of time
Cash Flow statement	summary of money coming in and going out of firm
Liabilities	debt, what you owe
3 Type of liabilites	accounts payable, notes payable, bonds payable
Accounts Payable	current liabilities involving money owed to others for merchandise or services purchased on credit but not yet paid for.
Notes payable	loans, things to be paid back either short term or long term
bonds payable	money lent to the firm that will be repaid long term
Assets	cash, tangible items
3 types of Assets	current assets, fixed assets, intangible assets
current assets	items to be turned into cash within a year. Cash, accounts receivable, inventory
Fixed assets	long term assets , land, buildings and equipment
intangible assets	long-term assets with no physical form. Patents, trademarks, copyrights and goodwills.
Equity	what you own (net worth)
Owner's equity	amount of business that belongs to owner minus any liabilites owed by the business
Retained earnings	accumulated earnings from a firm's profitable operations that were kept in the business and not paid out to stockholders in dividends
NET LOSS OR INCOME	resources left over
Revenues	value of what a firm received for goods sold, services rendered and other financial sources
Current Ratio	current assets/current liabilities= # of current sales for every $1 of current liabilities
Acid-Test Ratio	cash + accounts receivable + marketable securities/ current liabilities= # of potential assets for every $1 of liabilities
Leverage (Debt) ratio	measure the degree to which the firm relies on borrowed fund in its operations. Total liabilities/ owner's equity= % of borrowed funds that must be repaid
3 Profitability Ratios	EPS (earnings per share) Return on sales, return on equity
EPS	net income after taxes/# outstanding common stock shares= $/share
Return on sales	Net income/net sales= % company's income gained from sales acheived
Return on Equity	net income after tax/ owner's total equity= % of money earned for each dollar invested
Common stock	located in income sheet. REMEMBER STOCK IS REFERRED IN HUNDREDS SO MAKE SURE TO ACCOUNT FOR TWO WHOLE PLACES
Activity Ratios	how well firms turn resources into profits
Inventory Ratio	speed of inventory moving through the firm and its conversion into sales. Inventory turnover= cost of goods sold/ average inventory= # times.