BFIN300

Question 1

Capital Budgeting

Answer 1

Identify investment opportunities that are worth more to the business than they cost to acquire OR long term planning

Question 2

Capital Structure

Answer 2

• How you fund the company
• Debt (interest rate, long term/short term, how much)
• Equity (cost of equity, what RoI on invested capital is)

Question 3

Working Capital Management

Answer 3

• short term assets - short term liabilities (ex. money made from job - credit card bill)
• Ensuring the company has a going concern
• Finding out how much assets you need to have on hand

Question 4

Sole Proprietorship

Answer 4

• Assuming all responsibility (unlimited liability)
• No double-taxation
• ~13% of the USA Population

Question 5

Partnership

Answer 5

• Partners combine financial resources and knowledge
• Share successes and failures
• Not separate entities
• Still has unlimited liability unless a limited partner
• Always have a partnership agreement

Question 6

Corporation

Answer 6

• Liable for its own debt and litigation
• Protects owners for being personally liable only shareholders can approve amendments to the articles of incorporation
• Perpetual life - lasts forever - goes on even if the owners sell the business or die

Question 7

General Partner

Answer 7

Helps manage the business on a daily basis

Question 8

Limited Partner

Answer 8

Does not participate in managing the business so no personal liability to the company’s debts. Usually just an investor

Question 9

Financial Management

Answer 9

• Maximize shareholder value
• Increase profits
• Minimize costs

Question 10

Corporate Finance

Answer 10

Study of business decisions and how those decisions impact the value of the company