MGMT 1P93 Lecture Notes - Lecture 8: Money Market Fund, United States Treasury Security, Capital Structure
30 Mar 2015
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Historically a firm has aimed to maximize its value in the eyes of shareholders, but a commitment to meeting social responsibilities can also contribute to profit. Financial ratios provide insight into financial strengths and weaknesses. Use financial date from balance sheets and income statements. Companies can compare their ratios to other companies. Inventory turnover : cost of goods sold/average inventory. Return on equity: (net income-preferred dividends)/average common stock equity. How much can the firm generate internally and externally. Balance sheet: forecasts the types and amounts of assets a firm will need to carry out its plans. Detailed projection of cash flows to determine when cash shortages and surpluses occur. Treasury bills: very secure, up to 270 days. Money market funds: places where you put money, highest interest rate. Spontaneous financing: arises from day to day operations. Factoring: when a creditor sells a debt to another company to collect, for a discounted price.
