Management and Organizational Studies 1023A/B Study Guide - Final Guide: Liquidating Distribution, Unsecured Debt, Callable Bond

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 1023A/B
• Professor: Barry Hawn

Document Summary

The science or study of the management of funds. Good financial decisions that increase stock price. Arbitrator and moderator between conflicting interest groups, stakeholders, objective. Contractual claims - creditors, managers, employees, customers hold against the company. Residual claims - shareholders have against the company. Capital budgeting decision - long term investments. Capital structure decision - raising money to fund long term investments. Raise funds, obligations (stocks, debt securities); investments; cash from operating activities; Profits are not equal to cash flows; cash flow drives the business. A dollar today is worth more than a dollar received in the future due to interest. Positive and zero npv is acceptable but not a negative npv. Cash outflows - initial investment, incremental operating costs, repairs, inventory. Cash inflows - incremental revenues, reduction in operating costs, salvage value. Discount rate - costs of capital is the minimum required rate of return.