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Chapter 1 notes

by: Cody Appell

Chapter 1 notes 240

Cody Appell
GPA 4.0

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About this Document

This is the first chapter of notes
Business Finance
Dr. Cring
Class Notes
business finance
25 ?




Popular in Business Finance

Popular in Filipino

This 2 page Class Notes was uploaded by Cody Appell on Tuesday March 29, 2016. The Class Notes belongs to 240 at Illinois State University taught by Dr. Cring in Spring 2016. Since its upload, it has received 14 views. For similar materials see Business Finance in Filipino at Illinois State University.


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Date Created: 03/29/16
Capital: money that is long-term (more than one year) Money Mark: less than one year Commercial Paper market: very short term (30 days)  Usually given to large reputable companies Cycle of Cash Management Needs  Companies will establish needs and get a line of credit for what they need  During the year the company can use this line of credit to operate  When the money starts flowing in then the line of credit is paid back Liquidity: The ease in which one asset can be converted into another asset, particularly cash  Cash is the most liquid  Behind cash are US Treasury Bills (Short term government borrow)  Down sides; long term assets give greater return than short term investments Illiquid Assets: People, cars, house Money: Anything that is generally accepted and exchanged for something else  Barter Money: Has full value as the asset itself  Commodity money (metal money): Generally accepted, but doesn’t carry full intrinsic value (i.e. gold, silver)  Fiat Money: No intrinsic value, only has the value that the law has given to it (Dollar bills)  Crypto money: Hash, bit coin Markets  Money  capital  Financial o Debt markets: Borrowing and lending; Shorter relationship than Equity  Larger than equity market  Bondholders lent money and expect it back  Claim first: first claim on profits for repayment of debt  Prior claim  Bill: Short term debt less than 1 year  Notes: 1-7 years  Bond: More than 7 years  Issuer: the issuer of the debt instrument  Buyer: The buyer of the debt instrument o Equity markets: markets of ownership;  Stockholders are owners  Residual claim: o Dividend: A way of showing that there is plenty of money to reinvest and “throw away” the rest to the shareholders o Reinvest  Plowback  Product Sole Proprietorship: one owner assumes all of the risks and rewards  70% of all business; 20% of all revenues Companies are state entities  Any state will allow a DBA (doing business as) or fictitious name Partnership: Partners are jointly and severally all at risk; more than one person  Nothing but the people  Must be formal  Limited Liability: Partnership where units are sold to certain partnerships and they are only responsible for their portion Corporation: the company is a legal entity; shareholders are not the company  Domestic to the state in which it is registered o Any other states in which business is done the company is seen as a foreign corporation  Responsible for it’s own bills  Does not die, but it can be killed by its own stupidity and irresponsibility  Shareholders are not responsible for the debts of the corporation  Debt holders can take everything in the corporation to reclaim debt, shareholders can’t


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