MIS 111 09-3-2014
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Date Created: 09/04/14
MIS O932014 Introduction to Financial Markets Financial Markets you will have an opportunity to learn how companies use accounting principles to describe a company How financial markets determine the market value of a company How information systems helps investors analyze and influence a companies value Financial statement 1 the balance sheet look up picture on boode gtquotts a financial snapshot of a company at a given point in timequot 2 The income statement 3 Cash Flow Shortterm solvency activity financial leverage profitability value 0quot39gt0 3 Some accounting principles Accounting items are classified into accounts according to their nature translated into monetary units and organized in statements Basic Accounting formula quotassetsLiabilitiesequity gtKNOW THIS Equity ownership of a company is divided in certificates called common shares accounting value or book value equityassets liabilities Market value share price number of common shares outstanding INCOME STATEMENT reports the economic results of a company over a time period It shows the derivation of eatings or losers Gross margin gt Gross profitsales sales and marketing research and development Operating income EBT gt Operating incomesales Return on saes gt Net incomesales Return on equity gt net income shareholders equity Net income before taxes Net income BALANCE SHEET Current assets gt Current liabilities cash and equivalents inventories Fixed assets gt ong term liabilities property plant and equipment Other assets gt Shareholders equity Intangibles and investment securities total assets total liabilities shareholders eduitv Workind capital measure of the amount of cash available in the short term Statement of cash flows gt how much money can we make the movement of money into or out of a business Business financial data for publiclytraded companies stock market exchanges company ticker symbols financial reporting annual quarterly DAX gt how companies are doing at the moment with stock NEW YORK STOCK MARKET Stocks an introduction 1 7Uquot39gt0 3 stock prices tell us the market value of companies which determines the allocation of resources the total assets of the company are the book value When investors become unjustifiably exuberant about the markets how is bubbles are created bubbles are persistent and expanding gaps between actual stock prices and those warranted by the fundamentals These bubbles inevitably burst creating crashes which can destabilize the real economy growth stock gt price appreciation income stock gt stable dividends speculative stock gt potential for substantial price appreciation cyclical stocks gt linked to the general state of the economy defensive stocks gt protective stocks mid cap stocks smal cap stocks How are stocks valued Chartists believe that they can predict changes in a stocks price by looking at patterns in its past price movements Behaviorists they tell you which companies hold the losing stocks Technical check historical price movements read chap 3 section 1 business ethics
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