1 / 19

The Mid-Term Exam

The Mid-Term Exam. WHAT IT ISN’T : Not Bluebook, Scantron , Lap-top, Open-Book or Open-Note WHAT IT IS : Emphasizes Terminology and Applying Themes. The Mid-Term Exam. Bring several Pens or Pencils. Earn all the Points on Essay Questions Clearly State Answer (Thesis) Explain Answer

alec-dalton
Download Presentation

The Mid-Term Exam

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The Mid-Term Exam WHAT IT ISN’T: Not Bluebook, Scantron, Lap-top, Open-Book or Open-Note WHAT IT IS: Emphasizes Terminology and Applying Themes

  2. The Mid-Term Exam Bring several Pens or Pencils • Earn all the Points on Essay Questions • Clearly State Answer (Thesis) • Explain Answer • Why did you write what you wrote? • Don’t repeat Question

  3. Three Organizational Forms

  4. THREE BASIC FORMS OF BUSINESS ORGANIZATIONS Which Form Best Fits the Needs of your Business?

  5. Determinants of Organizational Form • Owner’s Objectives: Control, Liability, Capital Needs, Distribution of Profits (Losses) and Taxes • Dealings with Outside World: Other Owners, Employees, Suppliers, Customers and Future Owners • Legislative Goals: Special-Purpose Entities subsidize Social Objective

  6. Occurs when (1) Goals of Principal (Owner) and Agent (Employee) Conflict and (2) Principal cannot Verify what Agent is doing • THE AGENCY PROBLEM Corporate Shareholders (Principal) • Investor: Maximum Returns (High-Risk/High-Return) • Cannot operate Business • Liability is Limited: Can Lose only Investment Corporate Management (Agent) • Manager: Stable Returns (Low-Risk/Low-Return) • Can operate Business • Unlimited Liability: Lose Job and Income

  7. Who’s responsible for Managing a Corporation? What Doyou get with Common Stock and Do Not get with Preferred Stock? ‘Limited Liability’ and ‘Double Taxation’ 7

  8. Unemployment/Employment Rate • Job Growth (Demand) vs. Labor Force (Supply) • Always a ‘Bad Thing?’ • Gross Domestic Product (GDP) • National, Regional and Local • Inflation • Consumer Price Indexes • Who Benefits and Who Loses? • Interest Rates • Leading Indicator • Principal Tool of Monetary Policy

  9. Satisfy 10% Reserve Requirement Every Day for Two Weeks of Every Month Shortage creates Market for Needed Reserves Overnight Loans of Federal Reserve Funds

  10. FOMC trades Government Securities to INFLUENCE Fed Funds Rate

  11. DEMANDElastic or Inelastic? Elastic Demand: Quantity Demanded is Highly Responsive to Price Changes (Flatter Curve) Inelastic Demand: Quantity Demanded not as Responsive to Price Changes (Steeper Curve)

  12. Firm has • COMPETITIVE ADVANTAGE • When… • Competitors cannot Duplicate Value-creating Processes of its Product and Market Position

  13. Meaningful Product Differentiation • TargetingUnder-served Market Segment • Effective Distribution Channel

  14. Essential Accounting Reports Balance Sheet Income Statement Statement of Cash Flows

  15. THREE ESSENTIAL METRICS • Current Ratio • Debt-to-Equity Ratio • Return-on-Equity Ratio

  16. CAPITAL STRUCTURE SOURCES • Retained Earnings • Trade Terms INTERNAL EXTERNAL • Debt: Loan or Bond Source: Commercial Bank • Stock: Preferred or Common Source: Investment Bank

  17. RECONCILE SOURCES/USES OF CASH Operating NeedsTiming and Amounts Capital NeedsGrowthand Contraction

  18. IMPLICATIONS OperationsDebt Claims on Cash Flow/Assets GovernanceCommon Stockholders’ Rights

More Related