AFM101 Lecture Notes - Lecture 1: Retained Earnings, Cash Flow, Income Statement

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM101
• Professor: Shari Mann

Document Summary

Investors: individuals and groups who provide capital to a business -> shareholders. Creditors: provide the company with resources but do not own a share of the company. Companies hire managers to oversee the day-to-day operations of the business. When a company buys or sells property (eg. building a new manufacturing plant) Chapter 1 - financial statements and business decisions. Business operations: purchase materials and labour -> manufacture product -> collect cash from customers and pay creditors -> sell products to customers. Look for two sources of gain: sell ownership for more than they paid, receive portion of the company"s earnings in cash (dividends) A bank lends funds to the company that must be repaid in the future along with interest. Managers: are responsible to the owners (shareholders) of the company - not necessarily the creditors. Pertain to a companies core business activities that generate income (manufacturing, distribution)