Study Guide Fin principles 1-5
Study Guide Fin principles 1-5 Fin 201
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This 8 page Study Guide was uploaded by Filemoni Tiatia on Saturday February 14, 2015. The Study Guide belongs to Fin 201 at Brigham Young University taught by Dr Holmes in Winter2015. Since its upload, it has received 116 views. For similar materials see Finance 201 in Business at Brigham Young University.
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Date Created: 02/14/15
Tuesday January 13 2015 Finance Topic 2325 Accounting from the viewpoint of a finance person Balance Sheet BS Assets Most Liquid down to Least Liquid These are Current Assets Cash Market Security Assets Inventory Long Term Assets PPampE property plant and equipment Plant and equipment depreciate while property does not Gross Fixed Assets Accumulated depreciation contra asset If you subtract Accumulated Depreciation from PPampE you will have Net Fixed Assets Net Fixed Assets PPampE Accumulated Appreciation All of this MM will bring you your total assets Liabilities usually referred to as Debts in finance OR fixed income Also goes down in Lliquidity AP Accounts Payable inventory purchased on account Accruals eg you owe someone because you ve used a service AP and Accruals are typically noninterest bearing Notes Payable Bank NoteBank Debt It is INTEREST Bearing MAMA These are CURRENT LIABILITIES MAMAquot Long Term Liabilities Mortgage Tuesday January 13 2015 Bonds longterm debts Add Shortterm and LongTerm liabilities and you get TOTAL LIABILITIES Owners Equity Equity Preferred Stock ignore for the sake of this class Retained Earnings money that has been reinvested back into the company Common Stock Paid in Capital or additional paid in capital Common Stock and Paid in Capital is money raised selling stock Treasury Stock Bepurchased Stock If a company feels their stock is undervalued they would repurchase stock as a signal Sum of all these WWVW equal Total Equity Balance Sheet Equation Assets Liabilities Owners Equity Income Statement Revenues Sales COGS Cost of Goods Sold Gross Profit Operating Expenses Selling generating and administrative expenses Wages Utilities EBITDA Earning Before Interest Taxes Depreciation and Amortization We treat it just as amortization Depreciation Expense EBIT Operating Profit Interest Expense EBT taxable income Taxes Net IncomeEarningsProfit Tuesday January 13 2015 Not part of the Income Statement Net Income Cash dividends Retained Earnings Income Statement and the Balance Sheet are connected in two ways for the sake of this class Depreciation Expense listed in income statement and add it to last year s accumulated depreciation and it becomes this years accumulated depreciation Net Income Div RE Add this Retained earnings and add it to last years retained earnings to last years retained earnings You can t spend retained earnings it s already recorded somewhere on the balance sheet it is not cash New RE Old RE RE that is pulled from the net income on the income statement Know the three parts of Cash Flow s Also know that the three CF s the change in cash Cash Flo from Operationsinvestingfinancing Tuesday January 13 2015 Need to compute Cash Flow of Operations Ask yourself is more cash flowing in or out you will not need to compute CFI or OFF Net Income bottom line of income statement Whenever you sell assets you increasing your sources of cash and decreasing equipment or inventory don t remember the equations per se understand the intuitions Read through the Cash Flows Understand it Thursday January 15 2015 What s important Net Income or Cash Flow Net income doesn t necessarily share how much cash is in a company Cash Flow is more CFOCFICFF CFO CFI CFF We know that if assets increase A that cash is a negative cash flow If assets go down that means cash flow increases or sources increase If liabilities or owners equity go up A cash increases If liabilities go down then cash is being used Cash flow from operations Net Income Depreciation Change in operating asset accounts Change in operating liability accounts CFO Operating Assets All current assets except cash Operating Liabilities All current liabilities except notes payable Calculate CFO of 3 dudes inc Net income 331 650 Depreciation 40000 Change in operating asset accounts 23000 Change in operating liability accounts4000 NI 82 million Depreciation 3 million change in operating assets 8 mill change in operating liabilities 18 million Tuesday January 13 2015 Retained Earnings of this firm in 20x1 if it paid 30 M as dividends Tuesday January 13 2015 Old RE Net Income Dividends Net Income Sales Revenue Cogs Accruals expense is a Liaibility which means it is on the balance sheet Gross Income total amount in one year Disposable income money left after taxes for necessities Discretionary income money left after taxes and necessities Why is this important to marketers What is the primary driver of household income Education why Power of Buyers can also include the retail markets that sell the product wal marttaco bell etc Threat of Substitutes Regulatory Forces State and Federal laws can affect businesses Example State Bottle Bills Tomra Reverse vending machines SWOT Analysis Play to their strengths and capitalize on them Moderate Weaknesses Strengths and weaknesses should be through the perspective of our customers Exploit Opportunities Minimize Threats example Ben and Jerry s was bought out by Unilever Ben and Jerry s internal strengths Prestigious wellknown brands compliments unilever s other brands Recognized for social responsibility Weaknesses Social responsibility could reduce focus relatively inexperienced managers flat sales and profits in recent years Opportunities Growing demand in international markets Increased demand for lowcalorie desserts Threats Consumer concern with fatty desserts CompetitionsHaagen Airtran Strengths Tuesday January 13 2015 Strengths low operating costs and they pass those costs onto the customer Weakness age of airplane fleet is old Tuesday January 13 2015 Assignment 1 Available Under topic 3 Standardization versus Customization You will turn it in through myeducator researching how companies may standardize or customize their product offering across countries 1 choose a country 2 Select 3 countries outside their domestic 3 demonstrate a standardized marketing approach using one ormolu elements of the marketing mix across the 3 countries Compare the same marketing mix elements across the 3 countries If you choose product stay with product across the 3 countries or promotionetc 4 Document your source publication website advertisement personal expenence 5 discuss the reasons the standardized approach works well for this company across the 3 countries What are the options to grow our business Global Marketing 1 Should we market abroad 2 which foreign markets are most attractive 3 What are the risks
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