BUSI 100

Thoreau

• Reading has to be something meaningful and we have to actually engage in the reading

• works will be influential forever and it is important to read the classics

• You have to train your mind (example of the athlete)

• Encourages to “read deeper”

Plato

• A state is formed when there necessity for each other so they work together and exchange goods

• People specialize in different jobs and depend on each other

• State develops on the idea of mutual benefits

• Increasing desires of wealth and greed —> luxury —> competition of resources —> war

Adam Smith

• acting on own self interest can contribute to making society better

• Free trade and specialization usually make better use of a country’s resources

• Trade restrictions protect domestic businesses but hurt other aspects (does not increase the amount of work or employment)

Milton Friedman

• “Social responsibility”

• Businesses only have the responsibility of maximizing profits

• Individuals are the only ones who have social responsibility

• When a company decides to act this way, spends money that isn’t theirs and it is unfair (forcing people towards social causes)

• Being “socially responsible” has also been used as a disguise to being self-interested

Andrew Carnegie

• progress inevitably requires inequality

• Progress has raised the standard of living for everyone

• The poor have what the rich once couldn’t afford

• Industrialization created a social distance between the employer and the employee

• The wealthy should act as trustees for the poor

• The rich shouldn’t die with their wealth (should give their money away in their lifetime)

Jim Valvano

3 things we should focus on every day

1. Laugh

2. Think

3. Emotion: need to cry

Successful if you can focus on

1. Family

2. Religion

3. Team (Green Bay Packers)

Pacioli

• the 3 things that are essential for a careful business are: cash/capital, a good bookkeeper, and a systematic way to record transactions that could be understood “at a glance”

• Merchants should avoid laziness

• A merchants purpose is to make a lawful and reasonable profit to sustain its business

Daniel Defoe

• tradesman should always keep up with their books

• Never dismiss an error in the books (even if it a gain)

• Good bookkeeping builds trust and character

• Neglecting book keeping is a sign of emotional avoidance

• It is important to keep track of every transaction as it goes

Aym Rand

• money is a tool and reflects the value people give it

• Money rewards ability

• Money reflects honestly and hard work, those who hate money haven’t gotten it honestly

• If money comes in a corrupt way then society is deteriorating

• America is the first country to see wealth as something that you have to work/earn

John B. Williams

• a stock is what you can get out of it

• What is worth in present time after discount value

• Price is based on future earnings

• Investors = buy and hold for income (dividends)

• Speculators = buy and sell for income

• A stock is worth “what you can get out of it”

Martin Shkreli

• showcases Friedman doctrine of acting to benefit shareholders and customers

• Increased the price of Daraprim

• Stated that he wished that he would’ve put the price higher because that’s his job

Principal-agent problem

The Agent (CEO) must act in the favor of the shareholders (Principal) always

Merck: Mectizan Donation Program

• giving drugs for free increased their profit and admiration for the brand

• computing self interest while also dealing with social responsibility (used as a cloak)

Net income

Revenues - Expenses

Revenue

• the amount of total sales within a reporting period

Expense

• the “costs” incurred to generate revenues 

“Issuing common stock “

• selling shares of your company to make money

Benefactor

• provides for an entrepreneur or business person without expecting anything back

Operating activities

• related to the provision of goods or services and other normal business activities

Investing activities

• related to the acquisition or disposal of long-lived productive assets

Financing activities

• related to owners or creditors 

Future Value

FV= PV * (1+r)

Present Value

FV / (1+r)

Net Present Value

• Present Val - Investment

• Rule: if NPV>0 then invest; if NPV<0 then do not invest