BA 101 Lecture Notes - Lecture 10: Initial Public Offering, New Product Development, Retained Earnings

• School: University of Oregon
• Department: Charles H. Lundquist College of Business
• Course: BA 101
• Professor: durant

Document Summary

Create goods and create transactions, change goods into dollars at a profit: opportunity recognition: identify an opportunity in the market, develop a strategy for serving customers, acquire resources / commitments. Short term: accounts receivable (credit sales to customers), inventory, new product development. Long term: equipment (automation), facilities (additional capacity), buy other companies: accounts receivable: number of days before payment is due. 0 days: lose a lot of appeal and potentially lose a lot of customers, but you get your cash at time of sale. 120 days: very appealing, more customers, but your cash is tied up, and you get some squirrely customers. Borrow: take on debt (pay interest on use of someone else"s $) Reinvest earnings: retained earnings (use your net income to finance future investments) Your company risk is a function of your debt. Greater the debt, greater the risk, greater rate of interest you have to pay.