COMM 121 Study Guide - Investment, Frequency Distribution, Dividend Discount Model
Document Summary
V (value) = b (bonds) + s (shares: net working capital: (current assets liabilities) the mismatching of cash inflows and outflows. Financial managers: create value from firm"s capital budgeting, financing, and liquidity activities. Timing of cash flows: one dollar received today is worth more than one dollar received next year because today"s dollar can be invested to earn interest. Partnership & sole proprietors: advantage = cost of getting started, disadvantages = (1) unlimited liability (2) limited life of the enterprise (3) difficulty of transferring ownership. Corporation: difficult to start- become their own citizen of its province of incorporation: shareholders (the owners, directors, corporation officers (top management) Income trusts: hold the debt and equity of an underlying business and distribute the income generated to unitholders. Shareholders and managerial interest conflict pricey to enforce agency costs. Managers: survival, independence, and self-sufficiency (corporate wealth) Stakeholder concerns are attaining additional clout through the growth of interest in ethical or socially responsible investing.
