Lecture Notes Week 6 (Class 11+12)
Lecture Notes Week 6 (Class 11+12) BA 101
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This 6 page Class Notes was uploaded by howellkaila on Friday February 13, 2015. The Class Notes belongs to BA 101 at University of Oregon taught by Tom Durant in Winter2015. Since its upload, it has received 115 views. For similar materials see Intro to Business in Business at University of Oregon.
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Date Created: 02/13/15
BA 101 Week 6 Classes 1 Before we get into the material for the day Tom usually talks about Foundation and gives us some helpful hints for the round that is due that day I would highly suggest being in class so you can hear these hints He usually just talk about them but you can also look at the slides on Blackboard and your Industry Conditions Report for help If you are having trouble with Foundation and do not want to go see the tutors use the Capsim Tutorials and Online Guide You can find the online guide by going to your Dashboard in Capsim going to the top of the page and click Help Then you click on online auide and a new window will pop up You can search anything you are having trouble with and they will give you a great answer Financing funds to start and grow a business You can get this money from debtequityretained earnings On your balance sheet long term debt and owner39s equity are your financing costs Investing acquire assets to run a business lending money to others This is what you do with your money On your balance sheet the investing costs are your total fixed assets Operating Create goods and create transactions Using your current money to complete daily operations Changing goods into money profit On your balance sheet the operation costs are your total current liabilities and total current assets How much cash do you need 0 Invest I Short Term Accounts Receivable O The longer people have to give you your money the more customers you get and you are more appealing Since your cash is tied up for months when you raise Accounts Receivable only do this if you have a lot of cash Inventory New Product Development I Long Term Equipment automation Facilities Capacity In the real world buy other companies 0 Search for sources search for ways to get some money I Borrow Pay interest to use someone else39s money I Reinvest Earnings Retained earnings Use your net income to finance fute investments The way I remember what retained earnings means is both the meaning of retained earnings and the title of retained earnings have re in it Through REtained earnings you are REinvesting I Sell Stock Share ownership of the company with the people who invest into your company I Band Loans Must apply Determines whether or not to make the loan based on the risk The higher the risk the higher the interest rate This is a contract so the terms do not change One borrows money from a financial institution It can be either short or long term 110 years borrowing money from the market 10 year loan Bond Series Series quot5 Face The cash you received from the bond and how much you will have to pay back at maturity Yield Interest Trading Price Close Close What the bond is trading for today and what you need to pay to retire it early S amp P Risk Rating AAA is really good A is good BBB is good D is bad taking on new owners selling shares of stock This can be a bad thing because it can take away ownership from you and your previous stockholders which can piss people off because the price of your stock is going down Primary Markets stock or bonds that are sold to investment bankers AKA Underwriters Secondary Markets subsequent owners trade previously issued shares of stock and bonds This creates the stock market You give the company money You own a piece of the company You are happy when stock price goes up because you benefit You are happy when your company gives a dividend For companies the corporation receives money in exchange for ownership Common Stock Stock owners share the risk and reward with the company so it is really like you own a piece of the company Close The value of a share at the end of the trading day Change how high or low the price of the stock is compared to the day before Shares amount of shares in the company outstanding stock Dividend cash payment to owners stockholders Yield dividend stock price PE or Price Earnings Ratio Closing price EPS EPS or Earnings Per Share Net Income Shares Book Value Owner39s Equity Number of Shares Market Capitalization Shares X Close This equals what the company is worth Once again Tom spent a majority of the first half of class explaining the decisions for Round 2 If you need extra guidance about your Rounds in Foundation look at the slides on Blackboard go to the tutoring center or use the Capsim Online Guide Issue Stock 0 To finance long term investments 0 Makes it harder to raise stock price Issue Dividend O Raises stock price 0 No investments to make 0 Never issue more than EPS Retire Stock 0 If you have a mass amount of cash 0 Want to improve potential to increase stock price Issue Bonds 0 Only to finance long term investments 0 Interest reduces your profit 0 More loans higher interest Retire Bonds 0 Only if you have a mass amount of cash 0 Reduces interest and future interest rates Short Term Loans 0 Do this as needed for operations For the following ratios know 39 To increase ROS decrease variableperiod costs raise your price or do both Amount of debt vs amount of equity owned in an asset The amount you OWE to the amount you OWN The lower the score the less you owe To increase ROE use Leverage vs Equity Sales Revenue EBIT Earnings Before Interest and Taxes Profits Net Income or Net Loss Cumulative Profit All net income over time SGampA Selling general and Admin PERIOD COSTS Contribution Margin Sales Variable Costs 0 When a question asks who had the smallest unit cost as a percentaae of their sales ML choose the highest Contribution Margin Cash How much cash you have Total Fixed Assets How big is the factory Total Assets How big and how much stuff Total Liabilities How much debt you have Total Liabilities and Equity value of owners39 claim Sales Revenue Total Variable Costs Cost of goods you sold Contribution Margin How much is left after you pay for your products also a measure of efficiency Short term Interest Cost of Finance Strategy Net Profit Profit Earnings Current Assets Current Liabilities Inventory Current Liabilities Total Debt Total Assets Owner39s Equity Number of Shares Net Income Shares If highlighted then it is a ratio you need to know
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