Financial Management
This is the goal of financial management.
What is "to maximize the current value of stockholders' equity"?
The easiest and least regulated type of business to start.
What is a sole proprietorship?
The accounting equation found on every balance sheet.
What is Assets = Liabilities + Stockholders’ Equity?
This is the "bottom line" of the income statement.
What is net income?
This is the key cash flow equation: Cash Flow from Assets = ?
What is Cash Flow to Creditors + Cash Flow to Stockholders?
This financial decision involves what long-term projects a firm should take on.
What is capital budgeting?
The form of business with double taxation but easy ownership transfer.
What is a corporation?
This metric = Current Assets - Current Liabilities.
What is Net Working Capital (NWC)?
This non-cash item lowers taxable income but doesn’t reduce cash.
What is depreciation?
This cash flow is calculated as: EBIT + Depreciation - Taxes.
What is Operating Cash Flow (OCF)?
The CFO's team manages this type of daily financial activities such as paying bills or buying inventory?
What is working capital managment?
The financial market where IPOs take place.
What is the primary market?
The ability to convert assets to cash quickly without losing value.
What is liquidity?
This tax rate is paid on your last dollar earned.
What is the marginal tax rate?
This is the formula for Net Capital Spending.
What is Ending Net Fixed Assets - Beginning Net Fixed Assets + Depreciation?
This law was passed in 2002 to combat accounting fraud after scandals like Enron.
What is the Sarbanes-Oxley Act (SOX)?
This type of secondary market has a physical location like the NYSE.
What is an auction market?
The true value of a firm’s assets based on what they would sell for today.
What is market value?
GAAP requires revenue to be recorded when this happens.
What is when it is earned (not when cash is received)?
This cash flow is calculated as Interest Paid - Net New Borrowing.
What is Cash Flow to Creditors?
This type of agency conflict arises when managers prioritize personal goals over shareholders.
What is the agency problem?
This document gives a corporation legal existence.
What are the articles of incorporation (or a charter)?
A firm’s use of debt to magnify gains and losses is called this.
What is financial leverage?
A single corporate flat tax rate after the 2017 TCJA.
What is 21%?
This metric is another name for Free Cash Flow (FCF).
What is Cash Flow From Assets (CFFA)?