Midterms Flashcards
Finance
The Science and Art of managing money
Budgeting
The act of estimating revenue and expenses over a period of time
Forms of Business Organizations:
Sole Proprietorship
A business owned by one person
Forms of Business Organizations:
Partnership
A business owned by two or more people
Forms of Business Organizations:
Corporation
An entity created by law owned by shareholders and may either be privately owned or publicly owned.
Privately Owned Corporations
Are often owned by family members whose stocks may not be offered to outsiders unless consent by the family members is secured.
Publicly Listed Company
Are owned by unrelated investors and are traded in organized exchanges like the Philippine Stock Exchange
Factors that Influence Market Price:
Controllable by Management
-Profitability
-Having a good liquidity and reasonable leverage position
-Dividends
-Competent management which affects the company’s operating efficiency
Factors that Influence Market Price:
Uncontrollable by Management
-Macroeconomic Conditions
-Political stability
-Prospects of the industry where the company operates
-General market sentiment
-Flow of foreign funds invested in the Philippines stock market
Liquidity
Measure of how easily it can meet its short-term obligations and is able to get your money whenever you need it.
Leverage
Use of significant amount of debt to purchase an asset and operate a company.
Dividends
Profit that investors get from the investments. Could be in a form of cash or other properties.
Investors’ goals
WEALTH MAXIMIZATION
Shareholders
Elect the Board of Directors. Holds one voting rights. Are the investors and owner of company
Board of Directors
The highest policy making body in a corporation. Ensures that the corporation is operating to serve the best interest of the stockholders.
