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FIN220 1 st Midterm Review

FIN220 1 st Midterm Review. Ch 1 An Overview of Financial Management. What is Finance? Finance within an Organization Corporate Finance, Capital Markets & Investments Forms of Business Organization Corporation (Advantages vs Disadvantages) Limited Liability.

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FIN220 1 st Midterm Review

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  1. FIN220 1st Midterm Review

  2. Ch 1 An Overview of Financial Management • What is Finance? • Finance within an Organization • Corporate Finance, Capital Markets & Investments • Forms of Business Organization • Corporation (Advantages vs Disadvantages) • Limited Liability

  3. Ch 1 An Overview of Financial Management • Stock Price & Shareholder Value • Shareholder Wealth Maximization • Intrinsic Value, Stock Price, & Executive Compensation • Intrinsic Value Vs. Stock Price • Equilibrium • Conflicts Between Managers, Stockholders & Bondholders • Managers vs Shareholders • Stockholder vs Bondholder

  4. Ch 2 Financial Markets & Institutions • The Capital Allocation Process • Financial Markets (Types of Market &Derivatives) • Financial Institutions • The Stock Market (The Market for Common Stock) • Types of Stock Market Transactions • IPOs • Stock Market Returns • Stock Market Efficiency

  5. Ch 4 Analysis of Financial Statements • Trend Analysis, Industry Analysis & Benchmarking • The DuPont Equation • Uses & Limitations of Ratios • Looking Beyond the Numbers • Potential Misuses of ROE

  6. Ch 4 Ratio Analysis • Liquidity Ratios (Current Ratio & Quick Ratio) • Asset Management (Inventory TO, DSO, FATO & TATO) • Debt Management Ratio • TIE & Debt Ratios (Total Debt to Total Assets) • Effect of Debt (Leverage) on ROE • 4. Profitability Ratios • Operating Margin, Profit Margin, BEP • ROA &ROE • Market Value Ratios • Price/Earnings (P/E) & Market/Book Ratio (M/B)

  7. Chapter 5 Time Value of Money • Time lines • Future values (FV) • Simple vs. compound interest • Compounding • Present values (PV) • Discounting • Finding annuity payments, periods, and interest rates • Ordinary annuity • Annuity due

  8. Chapter 5 Time Value of Money • Perpetuities • Uneven cash flow • Future value of an uneven cash flow stream • Compounding periods • Semiannual and other • Comparing interest rates • Nominal interest rate (APR) • Effective Annual Rate (EAR or EFF) • Fractional time periods • Amortized loans

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