Notes for Corporate Finance - 2082 Words

Corporate Finance Notes * Chapter One: Introduce to Corporate Finance 1. Three Questions: A. What Long-term asset should be invested? Capital Budgeting B. How to raise cash for capital expenditures? Capital Structure C. How to manage short-term cash flow? Net Working Capital 2. Capital Structure: Marketing Value of Firm = MV of Debt + MV of Equity 3. Finance perspect and Accountant perspect: Finance: Cash Flow ! Accountant: A/R means profit ! 4. Sole proprietorship, parternership and corporation | 5. The goal of financial management: Maximize the current value per share of the existing stock. 6. Agency problem and Control of the Corporation Agency Relations: stockholders with†¦show more content†¦The total Remarks: * Net Income is not Cash Flow, always different number * Outflow is -, Inflow is + 8. Statement of Cash Flow Cash Flow from Operation (OP CF): Net Income + Non-cash Expense + Adjustment in CAamp;CL (except Cash amp; N/P) Cash Flow from Investing (Capital Spending): Acquisition of FA (-) + Sales of FA (+) Cash Flow from Financing: changes in equity and debt * Chapter Three (Part One): Financial Statement Analysis 1. Standardizing Statement amp; Common-size Balance Sheets Common-size Balance Sheet / Income Statement: percent – noted sheet 2. Short-term Solvency or Liquidity Measures: A. Current Ratio = CA / CL CA: the book value and market value are likely to be similar B. Quick Ratio (Acid-Test) = (CA – INV) / CL INV is least liquid CA. Thus the BV of INV is least reliable. C. Cash Ratio = Cash / CL 3. Long-term Solvency Measures (Financial Leverage / Leverage Ratio) A. Total Debt Ratio = (TA – TE) / TA Debt-Equity Ratio = TD / TE Equity Multiplier = TA / TE B. Times Interest Earned (TIE) = EBIT / INT Interest coverage ratio C. Cash Coverage = (EBIT + Dep.) / INT EBIT + Dep. is called EBITD, A basic measurement of the firm`s ability to generate cash from OP. 4. AssetShow MoreRelatedCorporate Finance Notes1881 Words   |  8 PagesStudy notes By Zhipeng Yan Corporate Finance Stephen A. Ross, Randolph W. Westerfield, Jeffrey Jaffe Chapter 1 Introduction to Corporate Finance ..................................................................... 2 Chapter 2 Accounting Statements and Cash Flow.............................................................. 3 Chapter 3 Financial Markets and NPV: First Principles of Finance................................... 6 Chapter 4 Net Present Value....................................Read MoreCorporate Finance Test Notes3814 Words   |  16 PagesFinal Exam Corporate Finance FINC 650 1. Which of the following is not considered a capital component for the purpose of calculating the weighted average cost of capital as it applies to capital budgeting? a. b. c. d. e. Long-term debt. Common stock. Short-term debt used to finance seasonal current assets. Preferred stock. All of the above are considered capital components for WACC and capital budgeting purposes. 2. A company has a capital structure which consists of 50 percent debt and 50 percentRead MoreCorporate Finance Study Notes1863 Words   |  8 PagesSolutions to Chapter 10 Introduction to Risk, Return, and the Opportunity Cost of Capital capital gain + dividend ($44 − $40) + $2 = = 0.15 = 15.0% initial share price $40 1. Rate of return = Dividend yield = dividend/initial share price = $2/$40 = 0.05 = 5% Capital gains yield = capital gain/initial share price = $4/$40 = 0.10 = 10% 2. Dividend yield = $2/$40 = 0.05 = 5% The dividend yield is unaffected; it is based on the initial price, not the final price. Capital gain = $36 – $40Read MoreEssay On Corporate Finance806 Words   |  4 PagesCorporate Finance in the age of Thinking Computers. 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