Principles Of Corporate Finance Brealey 11th Edition Study Guide Rated A+

Partnership {Ans: A business owned by two or more people. They do not pay income taxes, only personal income taxes.}Variance formula {Ans: ∑(x - X)²}Equity {Ans: The value of the shares issued by a company.}P/S Ratio {Ans: It is the measurement of the companies profits. Ideal between 1 and 2. PROFIT-DIVIDENDS/ NR. OF SHARES OUTSTANDING}Financial asset {Ans: a paper claim that entitles the buyer to future income from the seller, like bonds, stocks, derivatives, claims on real assets, claims on income generated from real assets.}standard deviation formula {Ans: the square root of the variance}Return on Assets (ROA) {Ans: Measures how profitably a company uses its assets. Net income / Average total assetsX100.}Investment decision {Ans: the decision to build, buy, or lease plants and equipment; to enter or exit an industry}Annual Rate of Return (ARR) {Ans: (Stock Price Today-Original Stock Price)/Original Stock Price}Operating Profit Margin {Ans: Operating profit / sales revenue x 100}Financing Decision {Ans: Debt: If it borrows, the lenders contribute the cash, and the corporation promises to pay back the debt plus a fixed rate of interest. Equity: If the shareholders put up the cash, they do not