BUS101 Capital University MITTLER
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| Securities Markets | provides opportunities for businesses and investors
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| Opportunities of Securities Markets | funds can be raised to finance expsenses, investors can share growth and success of emerging firms
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| Roles of Investment Bankers | assist/issue new securities, underwrite issues, sells to institutional investors
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| Advantages of Bonds | no vote, interest is tax deductible, temporary source of funds, can be repaid before maturity date
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| Disadvantages of Bonds | increase debt, legal obligation to pay interest, rapid maturity rate
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| Specialty Bonds | Sinking Funds, Callable, Convertible
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| What is stock? | ownership, certificate, dividens, common vs. preferred
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| Advantages of Stock | no repayment, no legal obligation, does not create debt
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| Disadvantages of Stock | voting rights, dividends not-tax deductible, tough to manage
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| Investment Criteria | 1.Risk 2. yield 3. duration 4. liquidity 5. tax consequences
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| Standards and Poors | provider of independent credit ratings, investment risks, investment information
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| investing in Stock | consider.... growth vs. income, capital gain vs. dividends, blue chip vs. penny, market order, limit order, stock split
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| Stock Splits | shares split up to 50%, lower price increases demand, increase in demand increases price, shares go up a very small %, profit made
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| 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
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| Diversification | buying different types of investments; different bonds, different stocks. reduces overall risk of investment
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| Junk Bonds | high risk, high interest, debenture bonds that attract risk takers
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| debenture bonds | unsecured bonds given out only to firms with good reputation
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| Stock on Margin | investor buys up to 50% the cost of a stock from broker so they can own stock without paying full price
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| Commodity Exchange | buying and selling precious metals, minerals and agricultural goods
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| 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
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| Why Money? | economy dependence, money vs. barter, unit of value, electronic cash, money supply, global exchange
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| Characteristics of good money system | portability, divisibility, stability, durability, uniqueness
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| The Money Supply | 1. currency 2. demand deposits 3. total M1 4. time deposits & money market accts. 5. total M2
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| FRS (Federal Reserve Structure) | buys, sells govt. securities, foreign currencies, lends money to banks, regulates credit, collects economy data, processes checks
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| Accounting Vs. Financing | recording data vs. analyzing data and making decisions
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| 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
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| Why do firms fail? | 1. undercapitalization 2. poor control of cash flow 3. inadequate expense control
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| 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
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| Financial Planning | Forecasting long and short term needs, Budgeting, Establishing financial control
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| 3 Types of Budgets | Capital, Cash, Operating
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| Capital Budgeting | spending plans
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| Cash Budgeting | management of cash flow
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| Operating Budgeting | master budgeting
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| Financial Needs of Firms | daily operations, credit operations, acquire inventory, capital expenditurs
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| Debt vs. Equity financing (from a firm prospective) | borrowing and owing money vs. retained earnings within or selling stock
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| IPO | initial public offering
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| Promotion | inform and remind a target market about product, persuade them to participate in exchange
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| Promotion MIX | Personal sales, public relations, advertising, sales promotion
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| Integrated Marketing Communication | comprehensive use of promotion tools to create a strategy
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| Advertising | paid or non-paid personal communication through various mediums and identification of sponsor
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| Propaganda | non-personal communication that does not identify sponsor
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| Product Placement | putting the product where it can be seen
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| Interactive promotion | establishing a dialogue between buyer and seller to create a mutual, beneficial exchange
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| Personal selling | selling face to face
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| 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
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| trial close | tool used to force finalization of sale. focuses on specific details
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| 5 B2B selling steps | 1. approach 2. ask questions 3. presentation 4. close sale 5. follow up
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| Public relations | listen to public, change policies and procedures, inform people that you're responding to their needs
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| Publicity | information distributed via the media. not controlled or paid for by sponsor
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| sales promotion | sampling, word of mouth
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| Push strategy | convince wholesalers and retailers to stock merchandise so customer walks in, sees it, buys it
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| Pull strategy | heavy advertising and promotional efforts so that customer request product from retailers
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| 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
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| 3 Financial statements | 1. Balance Sheet 2. Income Sheet 3. Cash flow statement
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| Balance sheet | financial condition on specific date
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| Income sheet | summary of revenues, costs of goods and services for a specific period of time
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| Cash Flow statement | summary of money coming in and going out of firm
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| Liabilities | debt, what you owe
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| 3 Type of liabilites | accounts payable, notes payable, bonds payable
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| Accounts Payable | current liabilities involving money owed to others for merchandise or services purchased on credit but not yet paid for.
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| Notes payable | loans, things to be paid back either short term or long term
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| bonds payable | money lent to the firm that will be repaid long term
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| Assets | cash, tangible items
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| 3 types of Assets | current assets, fixed assets, intangible assets
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| current assets | items to be turned into cash within a year. Cash, accounts receivable, inventory
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| Fixed assets | long term assets , land, buildings and equipment
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| intangible assets | long-term assets with no physical form. Patents, trademarks, copyrights and goodwills.
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| Equity | what you own (net worth)
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| Owner's equity | amount of business that belongs to owner minus any liabilites owed by the business
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| Retained earnings | accumulated earnings from a firm's profitable operations that were kept in the business and not paid out to stockholders in dividends
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| NET LOSS OR INCOME | resources left over
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| Revenues | value of what a firm received for goods sold, services rendered and other financial sources
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| Current Ratio | current assets/current liabilities= # of current sales for every $1 of current liabilities
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| Acid-Test Ratio | cash + accounts receivable + marketable securities/ current liabilities= # of potential assets for every $1 of liabilities
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| 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
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| 3 Profitability Ratios | EPS (earnings per share) Return on sales, return on equity
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| EPS | net income after taxes/# outstanding common stock shares= $/share
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| Return on sales | Net income/net sales= % company's income gained from sales acheived
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| Return on Equity | net income after tax/ owner's total equity= % of money earned for each dollar invested
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| Common stock | located in income sheet. REMEMBER STOCK IS REFERRED IN HUNDREDS SO MAKE SURE TO ACCOUNT FOR TWO WHOLE PLACES
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| Activity Ratios | how well firms turn resources into profits
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| Inventory Ratio | speed of inventory moving through the firm and its conversion into sales. Inventory turnover= cost of goods sold/ average inventory= # times.
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