Week 9 notes
Week 9 notes Fin 4310
Popular in Managerial Finance
Popular in Finance
BUSN 1301 - 006
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This 2 page Class Notes was uploaded by Laura Notetaker on Friday October 23, 2015. The Class Notes belongs to Fin 4310 at University of Texas at El Paso taught by Dr. Oscar Varela in Summer 2015. Since its upload, it has received 46 views. For similar materials see Managerial Finance in Finance at University of Texas at El Paso.
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Date Created: 10/23/15
Week 9 notes Pro Forma Common stock has 2 elements Both of these elements are the price the stock was sold for by the firm Common stock at par Paid in surplus Example If a stock being sold for 10 and the par value is 1 Common stock at par would be 1 and paid in surplus would be 9 When is stock sold As an IPO or on seasonal offering after the IPO To calculate cash and marketable securities and notes payable August Assets Accounts receivable inventory net plant and equipment 5010 August Liabilities Accounts payable income tax payable other accrual mortgage payable common stock retained earnings 5013 This means that we have more financing Cash should be 50 That gives total assets 5010 50 5060 this 50 are stated in the plans of the company It says that the company should have at least 50 on their balance sheet So liabilities and stockholder s equity 50605013 47 Notes payable will be 47 on the balance sheet For September Total assets 4773 Total Liabilities and stockholder s equity 4932 This means that we have more financing and there is no need for a loan Cash 159 4932 4773 159 Order to make proforma statements 1 Income statement 2 Balance sheet 3 Cash Budget Determine cash and marketable securities and notes payables last Week 9 notes Chapter 2 There are savers and borrowers Primary securities are sold with no financial intermediaries are sold by deficit units and are sometimes called indirect Secondary securities are what intermediaries sell and are sometimes called direct Efficiency function Allocational are you free to allocate your money as you wish getting the highest return for that risk It is a secure capital Operational Can you transfer savings to investors in a less costly way Promotional Whether markets require full disclosure and they have the least fraud Inside trading laws Efficiency Prices Weak form Price reflects historical information well Semistrong form Price reflects current public information well Strong form Price reflects all information including inside information End of year effect is an exception to the efficient price Airline crashes do not affect the stock price Security Act 1933 Security Exchange Act 1934 Investment Company Act 1940 Regulate the investing company Tried to get wealth back into the market It was the basis for hedge funds Investment Advisor Act 1940
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