FIN220 1st Midterm Review.

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Presentation transcript:

FIN220 1st 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

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

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

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

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)

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

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