Finance Exam 1 (Chapters 1-4)
4 Basic Areas of Finance - Corporate Finance
Financial Institutions
Investments
International Finance
Financial Institutions - Companies that specialize in financial matters.
- Banks
- Brokerage Firms
- Insurance Companies
What is involved in the ...
Net Working Capital - Current Assets - Current Liabilities
What is Liquidity? - Speed and ease of conversion to CASH
Book Value vs. Market Value - Book Value: The BALANCE SHEET value
Market Value: The TRUE value in the market
Income Statement Equation - Net Income = Income - Expenses
What is the income statement? - Measured performance over a specidied period of time
Noncash Items - Expenses charged against revenue that do not affect cash flow
AKA Depreciation
GAAP Matching Principle - -Recognize revenue when it is fully earned
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