Management and Organizational Studies 1023A/B Study Guide - Midterm Guide: Net Present Value, Capital Expenditure, Capital Budgeting

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

Document Summary

Finance: the science or study of the management of funds. Study of how and under what terms savings (money) are allocated between lenders and borrowers: lenders and borrowers are people and institutions that either have excess money to invest or need money for some reason. Business inance is heavily afected by household, government, and international inance. While econ is the study of the allocation of scarce resources, inance also examines under what terms and through what channels the allocations are made. Goal of the irm is to create value for the irm"s shareholders. By maximizing the price of the existing common stock. Good inancial decisions will help increase stock price and poor inancial decisions will lead to a decline in stock price. Management serves as an arbitrator and moderator between conlicting interest groups or stakeholders and objectives. Creditors, managers, employees, and customers hold contractual claims against the company. Shareholders have residual claims against the company.