Finance 301 Chapter 1
working capital
A firm's short-term assets and liabilities.
net working capital
Current assets - current liabilities = net working capital
Sarbanes Oxley
Intended to protect investors from corporate abuses
More General Goal: If not a publicly traded company
Maximize the market value of the existing owners' equity.
stakeholder
Someone other than a stockholder or creditor who potentially has a claim on the cash flows of the firm.
Financial Managers should
The goal of financial management is to maximize the current value per share of the existing stock.
capital structure
The mixture of debt and equity maintained by a firm.
agency problem
The possibility of conflict of interest between the stockholders and management of a firm.
Proxy fight
Unhappy stockholders move to change management by voting to replace someone's stock
capital budgeting
The process of planning and managing a firm's long- term investments.
Agency Relationships
The relationship between stockholders and management is called an agency relationship.
secondary markets
are those in which these securities are bought and sold after the original sale.
liabilities
current = life of less than one year like accounts payable long-term = loan of 5 years
assets
current = life of less than one year like cash, accounts recievable fixed = relatively long life
dealer markets
in stocks and long-terms debt (OTC) markets not a physical place
auction markets
physical place like wallstreet (NYSE)
primary market
refers to the original sale of securities by governments and corporations
