Interest is tax decuctable Principle and Interest are apart of amanization

Scorp is a creation of law combines partnership and proprietorship 3 ways to maximize shareholder value Capital Structure Capital Budgeting Dividends 4 goals or steps to financial management Develop a financial plan What are you going to buy? Coordinate efforts How does Wall Street help? What is the principle and agent dilemma? Principle- an owner Agent- a worker that works for the principle Dilemma- How do you make the worker always work in the best interest of the principle? Incentification- give the agent part of the action Earnings per share- net income divided by shares outstanding Book value- the intrinsic worth of a corporation A stakeholder- Someone who has an interest or an affiliation with the corporation Political risk- if there is a problem with the U.S. and a foreign country then we wouldn't be able to retrieve our dividends from the foreign countries Profit maximization- should make as much income as they can and let the shareholders give it back to the community 4 types of financial statement Balance Sheet Income Statement Cash Flow Report Retained Earnings Capital- assets less liabilities Networking Capital- current assets minus current liabilities (within a year) Liquidity Economic Value added- Important for future decisions of a company Board of Director's dilemma- What can they give the stakeholders

Ratio Analysis- the companies report card/ the stakeholders can see how the company is doing against other companies ROA= net income after taxes and interest paid before dividends divided by total assets ROE (more important for the independent investor)= net income available to common stockholders divided by common equity Financial Market- bring buyers and sellers together to make trades of stock 3 Types of Market Primary/Secondary Market Capital/Money Market Stock/Bond Market Derivatives- Derives its value from something else 3 Types of derivatives Calls-Derives its value from the shares I have/allows buyers to buy stock at a specific price during a specific time Puts-Putting the stock to the market (the institution) Futures-Making transactions months, maybe years ahead NASDAQ (over the counter market)-National Association of Securities Dealers Automated Quotations IPO- Initial Public Offering SEC-security exchange committee they regulate financial history Investment Banker- Liquefy companies, Bring companies to the market Financial Intermediary- bring money from buyers or borrowers and give it to people who need money bring both parties together Credit Unions- lend money to the ownership Time Value of Money- Money has value that must be invested Cash Flow Line- shows you the money going in and shows the money going out Opportunity Cost Rate- That's what one use to discount present value/*Investing in something else Uneven cashflow payments- it makes reinvestment more important Terminal value- what your asset is worth in the end Interest rate- the cost of money Annuity- fixed payment for a certain period Ordinary Annuity- Payment at the end of the month Annuity due- Payment at the beginning of the month