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This 4 page Class Notes was uploaded by Tiarra Jensen on Monday August 31, 2015. The Class Notes belongs to FIL 240 at Illinois State University taught by Trefzger in Fall 2015. Since its upload, it has received 434 views. For similar materials see Business Finance in Finance at Illinois State University.
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Date Created: 08/31/15
Fil 240 Business Finance Teacher Joseph Trefzger Note taker Tiarra Jensen tiiens1ilstuedu Week 1 Anything emphasized during class discussion will have a next to it gt This bullet mark will signify any mathematical equations List of what chapters to read topics and homework can be found at his website httpswww5cobilstueduiwtrefzfil240 A calculator is needed for his class but it cannot be a graphing calculator Day 3 August 25 2015 Wrap up Topic 1 Lenders LowRisk front of the line to get money back Assets purchased by owner 100000 Lender puts up 50000 If need to sell assets because business isn t doing too well imagine these two examples Assets sell for 80000 Lender gets 50000 Owner gets 30000 Assets sell for 40000 Lender gets 40 000 Owner gets 0 In a Single Ownership Many people can get added to create a partnership and soon they may need to incorporate Topic 2 Understanding Financial Statements Balance Sheet Snapshot of current moment in time The balance sheet can change within secondsdays Financial People more interested in the right side of the DebitsCredits what co has the money who paid for it Left Right Got Who Paid 2 Big Components of Owners equity Paidin Capital PIC 1000000 OR PIC common stock A 1 PAR 100000 PIC excess of PAR 900000 Total PIC 1000000 Voluntary Keep Incomeretained earnings by buying new assets instead of paying dividends Retained Earnings 100000 Manager decided Not Voluntary Total Owner s Equity 1100000 Assets Cash Marketable Securities Current Market Value Accounts Receivable Inventory Above Chart is listed by Liquidity Inventory FIFO first in first out LIFO last in first out Joke by Teacher FISH first in still here FIFO LIFO COGS Cost of goods sold Low Right Inventory Value Right Low Current assets Sale now liquid which is short term assets Dav 4 August 27 2015 Topic 2 Continued Don t typically know how much you can sell a large plant for It depends a lot on the organizational environment external constraint that affects the business Accrued Wages not paid yet since it s a Tuesday Paid so balance is 0 since it s a Friday What do you do if an employer insists that you have to wait a month for pay Employee should push back on the employer if possible for better paybenefits to make up for the costs incurred for waiting so long for pay If some accounts receivable will not come in must also lower retained earnings Income Statement Operating income does not work w widget ie iphone company Guts of Operation EX A business bought a piece of land Found they didn t want it and they rented the land out to a soybean farmer They get income but it does not come main purpose of income which is the widget iphone Retained Earnings 111 Statement of cash ows gt Accrual Accounting Concepts Revenue includes items shipped that money won t be received from until next year January Interest paid to lenders net income gt adjustment for interest is not shown there 0 Net Working Capital CACL Current Assets Current Liabilities CA 100 60 CL net working capital 40 If paid for w longterm debt Then Net working capital is short term lowearning assets paid for with long term money Company earns most money on things that distinguishes them Longterm assets Apple s long term asset would be something like the iphone They have to be able to use the longterm assets productively Long term assets are not liquid and therefore there has to be a tradeoff between liquidity and profitability Liquidity has benefits but hurts with longterm assets
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