Finance 300 Notes
Finance 300 Notes BLAW300
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This 5 page Bundle was uploaded by selena Notetaker on Monday January 25, 2016. The Bundle belongs to BLAW300 at University of Nebraska Lincoln taught by Steven Russell in Spring 2016. Since its upload, it has received 30 views. For similar materials see Business, Government, and Society in Business Administration at University of Nebraska Lincoln.
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Date Created: 01/25/16
change in NWC equals two cash flows at the percentage savingsdepreciation EBT Net income EBT taxes OCF Net income depreciation 0 Test 3 Capital money Budgeting Plan Net Present Value present value of future cash flows cost today Test 2 Time Value of Money This is an important concept If you can earn interest on deposits then your money can grow in the future basic Concept Money that earns interest will grow in value over time Future Value Money today x 1 interest rate quot time deposited Present value PV Rate of Interest r time deposited t n in glenns class Future Value FV FV PV1 rquott Present value Rate of Return PV FV 1 Rquott 1rquott FV PV r Fvpvquot1t 1 Ear 1 aprm quotm 1 EAR1 A 1m 1 X m Monthy total amount of months example 5 years 60 aprmonths I apr 12 Perpetuity PVperpetuity CF pmt I PV T this is what you get from the bank T from now Then solve for FV PVrquott Amortization kill it off a little bit at a time slowly 1 Lender gets the interest 2 anything left over after paying interest reduces the outstanding balance Solve for payment interest is always outstanding balance x interest after paying interest left over are subtracted from the balance initial about payment interest new balance Yield to Maturity 6 month rate x 2 annual Treasury Inflation Protected Securities Inflation TIPS ALWAY 1000 is not states 2 year 45 coupon TIPS today inflation in the 1st year is 625 What is the amount of the 1st coupon payment from the tips bond 1st year 4781 2nd year 3 END 2nd year 1045 10625 103 current yield Coupon Payment payment of the bond rate of return sale price coupon purchase price 1 Consul bonds perpetuities PV PMTr Current Yield Coupon Payment Price of the bond Sold at face value sold for par 1000 usually the YTM is equal to Coupon change new old 1 Test 1 Accounting balance sheet shows the value of the company s stuff AS OF A POINT IN TIME ASSETS LIABILITIES EQUITY Current assets Current Liabilities Balance sheet assets what the firm owns liabilities debt bondsIoanaccounts payablecurrent liability owner s equity shares of stock money who paid for it inventory short term asset Current asset plant and equipment long term asset Net working capital Current Assets current liabilities Liquidity cash account receivable inventory prepaid expenses Book value has no connection to what the asset is really worth Some taxes are based on book values Market Value is what someone will actually pay you for it Common stock the money contributed to the business by the owners Retained Earnings the income the company made that was NOT paid out as a dividend Contributed capital Common Stock add paid in DON T BELIEVE THE ACCOUNTING NUMBERS Accrual accounting matches revenues and expenses these may not occur at the same time Claims revenues when earned Cashflow statement shows cash inflows and outflows between balance sheet dates Net Income follows accounting rules Taxes 7500 6250 8500 Average tax rate Taxes I Earnings Before Taxes Marginal Tax Rate If you make one more What tax bracket are you in Leverage Ratios Debt to equity total debt total equity Debt to capital ratio Total debttotal equity total total debt Debt to enterprise value Net Debt enterprise value Net Debt total debt cash Enterprise value Market Value of Equity net debt PE Ratio market capitalization net income or Price per share Earnings per share change ending value beginning value beginning value OR Ending value beginning value 1 Market Capitalization Market Price per share x Shares Outstanding Dupont system Equity multiplier x profit margin x asset turnover
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