Introduction to business: finance

CC-BY-SA

Transcript

1. Finance: Acquiring & using funds cc licensed ( BY NC ND ) flickr photo by photog63: http://flic.kr/p/GzRs8
2. Quiz • Closed book/closed notes • Phones & computers put away • You may collaborate with your team • You are responsible for the answers on your quiz • You do not have to choose the same answers as your team
3. cc licensed ( BY NC ND ) flickr photo by tomfs: http://flic.kr/p/8zGd2J
4. cc licensed ( BY NC ND ) flickr photo by Eric E Johnson: http://flic.kr/p/5TCmBJ
5. cc licensed ( BY NC ND ) flickr photo by wallyg: http://flic.kr/p/azCBRS
6. Pay for it?
7. Cash?
8. Loan! (debt)
9. cc licensed ( BY NC SD ) flickr photo by axoplasm: http://flic.kr/p/6wWbD
10. cc licensed ( BY SD ) flickr photo by salisasaki: http://flic.kr/p/6Gx11F
11. cc licensed ( BY NC SD ) flickr photo by drewish: http://flic.kr/p/2UczJ
12. Pay for it?
13. Loan?
14. Cash! (equity)
15. Risk: probability of bad outcome creative commons licensed (BY-ND) flickr photo by GavinLi: https://flic.kr/p/7C7QQV
16. risk-reward tradeoff • higher return? • higher risk • lower return? • lower risk
17. Remember accounting? organizing, analyzing, and reporting financial information ratio analysis
18. Liquidity Ratios  current ratio:  current assets current liabilities  acid-test (quick) ratio:  cash + marketable securities + receivables current liabilities
19. Debt (Leverage) debt to OE: total liabilities owners’ equity describes capital structure
20. Capital structure • Balance between debt and equity • Generally similar within industry • Not always! –BUD: 1.084 –MolsonCoors: .4171 –SABMiller: .5549 –Boston Beer: .0011 • ????
21. Profitability EPS: net income after taxes number of shares outstanding return on sales: net income net sales return on equity: net income after tax owners’ equity
22. creative commons licensed (BY) flickr photo by StockMonkeys.com: https://flic.kr/p/dxpt8u
23. leverage creative commons licensed (BY-NC-ND) flickr photo by Martin Whitmore: https://flic.kr/p/5LVn8X
24. Leverage, equal capital Eck-Witty Corp. • Equity: $1,000,000 • Debt: $0 • Earnings: $120,000 • ROE: 12% Oze-Mor, Inc. • Equity: $200,000 • Debt: $800,000 • Earnings: $60,000 • ROE: 30%
25. leverage, equal investment Eck-Witty Corp. • Equity: $1,000,000 • Debt: $0 • EBIT: $160,000 • Taxes: $40,000 • Earnings: $120,000 • ROE: 12% Oze-Mor, Inc. • Equity: $1,000,000 • Debt: $4,000,000 • EBIT: $800,000 • Interest: $400,000 • Taxes: $100,000 • Earnings: $300,000 • ROE: 30%
26. leverage, equal investment Eck-Witty Corp. • Equity: $1,000,000 • Debt: $0 • EBIT: $80,000 • Taxes: $20,000 • Earnings: $60,000 • ROE: 6% Oze-Mor, Inc. • Equity: $1,000,000 • Debt: $4,000,000 • EBIT: $400,000 • Interest: $400,000 • Taxes: $0 • Earnings: $0 • ROE: 0%
27. current assets creative commons licensed (BY-NC-ND) flickr photo by County of Dare: https://flic.kr/p/nMo3ui
28. accounts receivable?
29. creative commons licensed (BY-SA) flickr photo by 401(K) 2013: https://flic.kr/p/biaNt6
30. creative commons licensed (BY) flickr photo by Inha Leex Hale: https://flic.kr/p/73x1km
31. Time Value of Money • Dollar today vs dollar tomorrow? creative commons licensed (BY-NC-SA) flickr photo by Cathérine: https://flic.kr/p/4wjsVc