BA 101 Lecture Notes - Lecture 10: Net Income, New Product Development, Retained Earnings
30 May 2018
School
Department
Course
Professor
Business 101 – Lecture 10 - Financing
Bond Certificate: Binds you legally to whatever is on the paper, loaner to company
- Guarantees money back
- Under Liabilities
Stock Certificate: Number of shares, company name, owner name. shows you own part of the
company
- More risky
- Making profit is not a guarantee
Business Activities
• Financing: Where do you get the money?
o Funds to start and grow a business (debt, equity, retained earnings)
• Investing: What do you do with the money?
o Acquire assets (stuff) to run a business renting money to others (who earn higher
returns)
• Operating: Using the money you have
o Create goods and create transactions
o Change goods into dollars (at a profit)
Planning and Finance
• How much do you need?
o Operations and growth
o What you take in minus what you spend
o Revenues – Expenses
▪ More cash than you need
• INVEST
▪ Less cash than you need
• SEARCH FOR SOURCES
Investing
• Short term:
o Accounts receivable
o Inventory
o New product development
• Long term
o Equipment (automation)
o Facilities (additional capacity)
o Buy other companies
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Bond certificate: binds you legally to whatever is on the paper, loaner to company. Stock certificate: number of shares, company name, owner name. shows you own part of the company. Business activities: financing: where do you get the money, funds to start and grow a business (debt, equity, retained earnings) Planning and finance: how much do you need, operations and growth, what you take in minus what you spend, revenues expenses, more cash than you need. Invest: less cash than you need, search for sources. Investing: short term, accounts receivable, inventory, new product development, long term, equipment (automation, facilities (additional capacity, buy other companies. Lose a lot of appeal and potentially lost a lot of customers: 30 days: 8% of the base. Sources too little cash: borrow: take on debt, pay rent (interest) to use someone else"s, dilute ownership: equity, share the ownership of the company with more people (investors) reinvest owners income into the company.
