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Lecture 8

ACCT-311 Lecture Notes - Lecture 8: Private Placement, Yokohama Rubber Company, Issued Shares


Department
Accounting
Course Code
ACCT-311
Professor
A N O N Y M O U S
Lecture
8

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private placement The sale of stock to only one or a few investors, usually
institutional investors. The advan- tages of private placements are lower flotation
costs and greater speed, since the shares issued are not subject to prospectus
requirements
pro forma (projected) financial statement Shows how an actual statement would
look if certain assumptions were realized
probability distribution A listing, chart, or graph of all possible outcomes, such as
expected rates of return, with a probability assigned to each outcome
professional corporation (PC) Has most of the benefits of incorporation but the
participants are not relieved of professional (malpractice) liability
profit margin on sales Calculated by dividing net income by sales; gives the profit
per dollar of sales.
profitability index Found by dividing the project’s present value of future cash flows
by its initial cost. A profitability index greater than 1 is equivalent to a posi- tive net
present value project 30
profitability ratios A group of ratios which show the combined effects of liquidity,
asset management, and debt on operations 6
progressive tax Tax system in which the higher one’s income, the larger the
percentage paid in taxes 4
project cost of capital The risk-adjusted discount rate for that project 34
project financing Arrangements used to finance mainly large capital projects such as
energy explo- rations, oil tankers, refineries, utility power plants, and so on. Usually,
one or more firms (sponsors) will provide the equity capital required by the project,
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