FIN 3715 Study Guide - Quiz Guide: Cash Flow, Financial Statement, Current Liability
Document Summary
Corporation limited liability, transferability of shares, juridical personality, indefinite duration (these are pros for a corporation) Joint-stock companies (partnership)- traditional legal corporations (medieval guilds. Merging two conceptual forms above (joint-stock & traditional legal) Require large sums of capital that could only be solved through corporate form and only with numerous innovations in debt/equity instruments. Made possible/necessary big expansion of other industries (steel & coal) that only the corporate form could support. Empirical evidence in support of goal, maximize shareholder wealth : Stocks that are sold from the company to individuals on the market. Use common financial statements (balance sheet & income statement) because all firms use them. Assume fixed or flat corporate tax rate in our valuations this semester. No need: mid- to large- corporations (which is our emphasis) have marginal tax rates in. Cash flow from assets (cfa); cash flow to claimsholders (cfc) Cfa = ocf - ncs - nwc = cfc (creditors/shareholders)
