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Corp Finance
Chapters
| Term | Definition |
|---|---|
| capital structure | The mixture of debt and equity maintained by a firm. |
| working capital | A firm's short-term assets and liabilities. |
| sole proprietorship | A business owned by a single individual. |
| partnership | A business formed by two or more individuals or entities. |
| corporation | A business created as a distnct legal entity composed of one or more individuals or entities. |
| Agency Problem | The possibility of conflict of interest between the stockholders and management of a firm. |
| stakeholder | Someone other than a stockholder or creditor who potentially has a claim on the cash flows of the firm. |
| balance sheet | Financial statement showing a firm's accounting value on a particular date. |
| Net working capital | Current assets less current liabilities. |
| Generally Accepted Accounting Principles (GAAP) | The common set of standards and procedures by which audited financial statements are prepared. |
| Income Statement | Financial statement summarizing a firm's performance over a period of time. |
| Noncash items | Expenses charged against revenues that do not directly affect cash flow, such as depreciation. |
| Average tax rate | Total taxes paid divided by total taxable income. |
| Marginal tax rate | Amount of tax payable to the next dollar earned. |
| Tax flow from assets | The total of cash flow to creditors and cash flow to stockholders, consisting of the following operating cash flow, capital spending, and change in net working capital. |
| Operating cash flow | Cash generated from a firm's normal business activities. |
| Free cash flow | Another name for cash flow from assets. |
| Cash flow to creditors | A firm's interest payments to creditors less net new borrowings. |
| Cash flow to stockholders | Dividends paid out by a firm less net new equity raised. |
| Sources of cash | A firm's activities that generate cash. |
| Uses of cash | A firm's activities in which cash is spent. Also called applications of cash. |
| Statement of cash flows | A firm's financial statement that summarizes its sources and uses of cash over a specified period. |
| Common-size statement | A standardized financial statement presenting all items in percentage terms. Balance sheeet items are shown as a percentage of assets and icome statement items as a percentage of sales. |
| Common-base year statement | A standardized financial statement presenting all items relative to a certain base-year amount. |
| Financial ratios | Relationships determined from a firm's financial information and used for comparison purposes. |
| Du Pont Identity | Popular expression breaking ROE into three parts; operating efficiency, asset use efficiency, and financial leverage. |
| Standard Industrial Classifications (SIC) codes | A U.S. government code used to classify a firm by its type of business operations. |
| capital budgeting | The process of planning and managing a firm's long-term investments. |
Created by:
rfillmore
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