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MIS Week 3 Class Notes

by: Smetana Larson

MIS Week 3 Class Notes MIS 111

Marketplace > University of Arizona > MIS 111 > MIS Week 3 Class Notes
Smetana Larson
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About this Document

These are notes from the in class lectures
Computers and Internetwork Society
Class Notes
MIS, information technology, business, Neumann Business




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This 3 page Class Notes was uploaded by Smetana Larson on Tuesday September 13, 2016. The Class Notes belongs to MIS 111 at University of Arizona taught by Neumann in Summer 2016. Since its upload, it has received 2 views.


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Date Created: 09/13/16
MIS 111  Dr. Neumann  Tuesday 9/6/16  1. Accounting vs. Finance  a. Accounting  ​ ​report​ and manages capital resources of a company  i. Financial accounting  1. External Information  2. Accounting statements  3. Tax accounting  ii. Managerial accounting   1. External information  2. Management and control  3. Budgeting (this is your plan)  4. Intraorganizational Accounting  b. Finance​ ​provides  ​ and manages the capital resources of a company  i. Manages assets that you want a return on (stocks, bonds, or company  investments)  c. Financial Statements  i. The Balance Sheet  1. It's a financial snapshot of a company at a given point in time  Current assets  Cash  Accounts receivable  Inventory  Fixed assets  Property  Equipment  Other Assets  Intangibles  Investment securities  =Net Assets   Current liabilities  Accounts payable  Accrued expenses  Long term liabilities  =Capital Employed              ii. The Income Statement  1. What is the financial impact of our operations  Revenue  ­COGs   Gross Margin  ­sales and marketing  ­general administrative  ­research and development  ­other expenses (SAG:sales, admin, and general expenses)   Operating Profit ​(EBIT: Operating Income)  ­interest and tax   Net profit after tax  +dividends   Retained Profit  iii. The Cash Flow​: reports cash receipts and payment over a period  separating investing operational, and financial activities  1. How is cash flow different than income?  a. Income accrual is not necessary linked to cash  transactions (e.g., depreciation, sales by credit)  b. Some activities affect cash flows but not income (e.g.,  investments in fixed assets, additional capital from  shareholders)  2. Growth often absorbs cash flow because of a higher need for  working capital and fixed investments  a. (entrepreneurial firms with negative income and high  growth can have a very fast cash burn rate)  d. Some Accounting Principles  i. Accounting items are classified into “accounts” according to their nature,  translated into monetary units  e. Accounting vs. Market Value  i. Equity​: ownership of a company is divided in certificates called common  shares  ii. Accounting value (or book value)=equity= ​ assets­liabilities  1. Stock prices are mood rings (you see what you want to see)  iii. Market value= ​ share price*number of common shares outstanding  iv. If book value and market value are close then it's a bad stock        Assignment 1: Create a mutual fund   Task 1: Select an investment strategy  ­top down investing  ­Bottom up investing: picking good stocks and looking at what they have in  common to find other stocks that are similar  ­Fundamental analysis  ­Technical analysis  ­Contrarian investing: going against what everyone thinks is going to happen  ­Dividend investing: these stocks are pretty solid overtime  Task 2: Select a stock portfolio  ­assume you have $100,00 to invest  ­you must have a pool of 10 stocks, but you can choose the allocation among  funds  Task 3: Justify your decision  ­historical performance, current economic conditions, market segments, etc.      Thursday 9/8/16    1. Stocks​ (introduction)  a. Stocks provide a key instrument for holding personal wealth as well as a way to  diversify, spreading and reducing risks that we face  b. For companies, they are one of several ways to obtain financing  c. Stocks and stock markets indicate the value of the companies that issued stocks  and, they allocate scarce investment resources  2. Stock market’s role in the Economy  a. Stock prices tell us the m​ arket value ​of companies, which determines the  allocation of resources  b. The total assets of the company are the ​book value  c. Firms with a high stock market value have an easier time garnering the resources  they need to grow, while firms whose stock value is low have difficulty financing  their operations  d. So long as stock prices accurately reflect fundamental values, this resource  allocation mechanism works well  3. The stock market  a. Every major country in the world has a stock market (exchange  


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