BU121 Study Guide - Midterm Guide: Variable Cost, Operating Leverage
Document Summary
7 principles of entrepreneurial finance: real, human, and financial capital must be rented" from owners. Real capital = physical assets: risk and expected reward go hand in hand. A new venture is a much riskier investment opportunity, but there is higher reward: while accounting is the language of business, cash is the currency. Cash is king: new venture financing involves search, negotiation, and privacy. Private financing is much different than the public stock market: less info, more unknowns, a venture"s financial objective is to increase value. It is dangerous to assume that people act against their own self-interests. People will not selflessly keep operating on a basis that is only good for you and not good for them: venture character and reputation can be assets or liabilities. Entrepreneur"s long term visions and decisions can accrue goodwill or liability.
