fina final uh- lopez

study guide

multinational corporation

a firm in two or more countries

S- corp

no more than 100 stakeholders, income passes through company to owner

What does it mean to have a greater concentration of ownership (typically in non-us firms)?

There is greater monitoring and control of business by individuals/their groups

Proprietorship

most common form of business, owned by one

corporation

generates most sales/profit, have an easier time raising money

Sarbanes oxley

standards for accountability and responsibility, reporting finances, etc

foreign industrial groups

tie together production functions, sales, start to finish

Multinational corporations

can be expropriated by local governments, means that local governments can take control of assets

Who is the subordinate of the Financial VP

Treasurer

Where is it common to assign banks/financial institutions as proxy votes?

Europe

Who is the Controller responsible for?

Accounting & Tax

Industrial groups

organizations made of companies with common ownership interests

what is an agency problem?

when there are issues with employees (leadership) making ethical decisions, the arise when managers don’t have enough take in the company/the stakeholders only have small pieces of the business(fragmented)

What acts as an indicator of future earning potential

Earnings per share

What INTERNAL factor influences stock price of firm?

capital structure

Debt ratio =

total liabilities / total assets

What is a common non cash item on the income statement?

Depreciation

What ratio helps determine the liquidity of a firm?

current ratio

Net working capital =

current assets - current liabilities

net cash flow =

net income + depreciation

(if depreciation is the only non cash item, this is because depreciation is - when solving for net income but + back with net cash flows since it is not an actual flow of money)

What measures how effectively a firm manages its assets?

inventory turn over ratio

What ratio recognizes that many firms lease (instead of buying) in the long term?

Fixed charge ratio

net worth =

total assets - total liabilities

Net operating income =

net sales - (variable operating costs + fixed operating costs)

Inventory turnover ratio =

COGS / Inventory

Corporate bonds

considered a long term debt, liability

T or F: An international firm can use IFRS instead of GAAP if that is the standard in their country?

T

What ratio shows how much investors are willing to spend

price/earnings ratio

What ratio shows the relationship between current assets and current liabilities

liquidity ratio

What type of analysis determines the state of finances of a span of time?

Trend analysis

What ratio shows the extent that operating income can decline until annual interest payments cannot be made?

times interest earned

What financial statement shows the revenue generated and the expenses incurred during an accounting period?

statement of cash flows

T or F: Does the balance sheet have historic values?

T