FIN 2800 Study Guide - Midterm Guide: Current Liability, Relate, Effective Interest Rate
4 Nov 2017
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Three key decisions & objective of the firm. Investment acquire assets, cash flows, taxes, time value of money. Maximization of shareholder wealth total return, risk-adjusted, long-term. Measurement stock price over years/performance of firm. Success = above s&p and company competitors. Principal-agent relationship an arrangement in which an agent acts on the behalf of a principle: shareholders of a company (principals) elect management (agents) to act on their behalf, shareholders given managers decision-making authority over the firm. Agency problems problems that arise when managers place personal goals ahead of the goals of shareholders. Bond long-term debt instrument used by business and government to raise large sums of money, generally from a diverse group of lenders. Preferred stock a special form of ownership having a fixed periodic dividend that must be paid prior to payment of any dividends to common stockholders. Four key financial statements: income statement, balance sheet, statement of stockholders" equity, statement of cash flows.
