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topic 1financial managementdecision-makingacquirepublicly traded corporationsvice president of financechief financial officer(CFO)chief executive officer(CEO)pivotalallocatevolatilitybalance sheetcapital budgetingworking capital managementhurdle ratecapital structuremix of debt and equitycash dividendstockholderdividend policydividend-payout ratiostock repurchasestock offeringtradeoffcommon stockcurrent assetcurrent liabilitymarketable securityinventorytangible fixed assetsintangible fixed assetspatenttrademarkcreditorstockholdersequityfinancing mixrisk aversiontopic 2businessfinancial risksole proprietorshippartnershiplimited partnershippartner limited partnergeneral partnerseparation of ownership and controlclaimmanagenment buyouttender offerNew York Stork Exchangefinancial standardsinitial public offering(IPO)private corporationclosely held corporationshareholder hoard of directorsexecutive directornon-executive directorchairpersoncontrollertreasurerMaster of Financial ManagementMaster of AccountingMaster of Business Administration(MBA)revenueprofitearnings per sharereturnmarket sharesocial goodfinancial distressstakeholder theoryvalue(wealth)maximizationcommon stockholder or shareholderdebt holderpreferred stockholder or shareholderwell-beingdiversifylearning curvegoing concernagency problemfree-riding probleminformation asymmetryretail incestorinstitutional investoragency relationshipprincipal-agent or agency relationshipnet present value(NPV)creative accountingstock optionagency costbonding costmonitoring coststakeovertopic 3a profit and loss statementaccelerated methodsaccounts payableaccounts receivableaccrrual accountingaccrued expenseaccumulated depreciationaccumulated retained earningsaffiliateamortizationbalance sheetbasic earnings per sharebook valuebottom-up approachcapital surpluscash flow from financingcash flow from investingcash flow from operationscheckcommon stockcomplex capital structureconvertible securitiescorporate annual reportscredit salecurrent liabilitycurrent market valuedeferred taxdepreciationdiluted earnings per sharedilutivedirect methodearnings per shareFinancial Accounting Standards Board(FASB)financial statementfinancing cash flowsGenerally Accepted Accounting Principles(GAAP)historical costhybridincome statementindirect methodInternal Revenue Service(IRS)inventoryinvesting cash flowsjoint ventureliabilitylong-term liabilitymarketable securitiesmoney ordernet incomenote payableoperating cash flowsoperating income(loss)outstandingpreferred stockprofitabilityproperty,plant,and equipment(PPE)real estate Securities and Exchange Commission(SEC)simple capital structuresolvencysource of cashstatement of cash flowstatement of change in shareholders equitystatement of retained earningsstraight-line depreciationtreasury stockuse of cashviabilitywarrantwithdrawaltopic 4financial ratio restrictive covenanatsbond indenturefinancial analystliquidity ratiocurrent ratio last-in ,first-out (LIFO)first-in ,first out (FIFO)window dressingmarketable securitiesquick ratiocash ratiodebt management ratiosdebt ratiodebt-to-equity ratioequity multiplierlong-term debt to total capital ratiosleverage ratiosinterest coverage ratio earnings before interest and taxes (EBIT)cash Flow Coverage Ratioasset management ratiosaccounts receivable turnover ratiosinventory turnover ratioinventory processing periodaccounts payable turnover ratiocash conversion cycleasset turnover ratiototal asset turnover ratioprofitability ratiogross profit marginoperating profit marginnet profit marginreturn on asset (ROA)return on total equity ratio (ROE)return on total equity (ROTE)return on common equity (ROCE)DuPont Analysis of ROEoperating profit marginP/E ratiomarket-to-book value ratiodividend yielddividend payoutlong-term ratiodebt-to-total-capitaltopic 5time value of moneysimple interstdebt instrumentannuityfuture value(FV)present value(PV)compound interestcompoundingprincipalmortgagecredit cardteminal valuediscountingdiscount rateopportunity costrequired rate of returncost of capitalordinary annuityannuity duedeferred annuityperpetuityface valueStandard & Poors Corporation(S&P)Moodys Investors Service,Inc.(Moodys)Fitch Investor Servicescurrent yieldyield to maturity (YTM)default riskinterest rate riskauthorized sharesoutstanding sharestreasury sharerepurchaseright to voteindependent auditorright to proxystraight or majority votingcumulative votingliquidationright to transfer ownershippreemptive rightdividend discount modelcapital asset pricing model(CAPM)constant growth modelgrowth perpetuitytopic 6protfoliodiversifiable riskmarket riskexpected returnvolatilitystand-alone riskrandom variableprobabilityprobability distributionprobability distribution functionnormality assumptioncoefficientstandard deviationvariancesensitivity analysisscenario analysismean-variance worldnormal distributionefficient market hypothesis(EMH)price takerinvestor rationlityrational behaviorinstitutional investorretail investorallocationally efficient marketsoperationally efficient marketsinformationally efficient marketsweak formsemi-strong formstrong formanomalyunderpricinginitial public offeringsMonday effectJanuary effectvalue effectpost-earnings announcement driftbehavioral financeexpected utility theoryprospect theoryportfolio theorymutual fundmean-variance frontiercovariancecorrelation coefficientNew York Stock Exchange(NYSE)capital asset pricing model(CAPM)beta coefficientcompany-specific factorarbitrage pricing theory(APT)capital expenditurecapital budgetfinancial distressbankruptcyTopic 7 Capital Budgetingexpansion projectreplacement projectindependent projectmutually exclusive projectincremental cash flowssunk costopportunity costoverheadresidual valueside effectnet present value(NPV)profitability index(PI)internal rate of return(IRR)payback period(PP)discounted payback perioddiscounted cash flow(DCF)Fortune 500sensitivity analysis break-even analysiasimulationcapital rationingpost-auditfinancial marketmoney marketcapital markettreasury notesprimary marketsecondary marketoption contractfuture contractrepurchaseinvestment bankMerrill LynchSalomon Smith BarneyMorgan Stanley Dean WitterGoldman Sachscollateralunderwritingunderwritersyndicate of underwritermanipulateprivately held corporationpublicly held companystock offeringgo publicTopic 8 Capital Market and Raising Fundsinitial public offering(IPO)seasoned issuespin-offspros and consincentive stock optiondilution of controlautonomyfloatationfloatation costunderpricingunseasoned issuepublic offerprivate placementpro ratarights offerprivileged subscriptionpreemptive rightcash offernegotiate offercost of capitalhurdle raterate of returnfinancing mixconvertible debtvariable-rate debtterm loanleaseweighted average cost of capital(WACC)hybird securityventure capitalistpublicly traded firmowners equityventure capitalnewly listed companyinvestment bankeroffering pricevoting rightwarrantunderlying common stockoption-like securitycontingent value rightsput optionoption exchangeTopic 9 Capital Structureput priceresidua
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