FIN 3403- Final Exam Guide - Comprehensive Notes for the exam ( 34 pages long!)
Document Summary
What is a firm: business organization, company, collection of assets to be used in production. What are the responsibilities of financial management: three main important areas of decision-making, 1. How to manage everyday financial activities of the firm: working capital management, 2. What long-term investments the firm takes on: capital budgeting, 3. What long-term funding is used: capital structure. Goals of financial management: ma(cid:374)agers should (cid:271)e (cid:272)o(cid:374)(cid:272)er(cid:374)ed (cid:373)ost (cid:449)ith shareholders" i(cid:374)terests, why do shareholders invest in company, to increase wealth, maximize vs. increase. Increasing stock prices creates wealth: goal- maximize shareholder wealth = maximize stock price. Cash flow is king: lenders care about cash and ability to repay, shareholders should care about cash, only cash can be paid out as dividends or reinvested in the firm. Income statement: a measurement over time of how much income the company has made. Earnings before interest, taxes, depreciation, & amortization (ebitda) Net income/ # common shares outstanding = earnings per share (eps)
