Summary: Principles Of Managerial Finance

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• 1 Chapter 1 +2 begrippen

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• Marginal cost–benefit analysis

  
  •is the economic principle that states that financial decisions should be made and actions taken only when the added benefits exceed the added costs

• foreign bond market

  
  •is a market for bonds issued by a foreign corporation or government that is denominated in the investor’s home currency and sold in the investor’s home market.

• international equity market

  
  •allows corporations to sell blocks of shares to investors in a number of different countries simultaneously.

• 2 Chapter 3 begrippen

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• Generally accepted accounting principles (GAAP) 

  
  Are the practice and procedure guidelines used to prepare and maintain financial records and reports; authorized by the Financial Accounting Standards Board (FASB).

• current rate (translation) method

  is a technique used by U.S.-based companies to translate their foreign-currency-denominated assets and liabilities into dollars, for consolidation with the parent company’s financial statements, using the year-end (current) exchange rate.

• 3 Chapter 5 begrippen

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• Discounting cash flows

  
  is the process of finding present values; the inverse of compounding interest.

• nominal (stated) annual rate 

  
  is the contractual annual rate of interest charged by a lender or promised by a borrower.

• effective (true) annual rate (EAR)

  
  is the annual rate of interest actually paid or earned.

• 4 Chapter 4 begrippen

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• Free cash flow 

  
  is the amount of cash flow available to investors (creditors and owners) after the firm has met all operating needs and paid for investments in net fixed assets (NFAI) and net current assets (NCAI).

• Long-term (strategic) financial plans

  lay out a company’s planned financial actions and the anticipated impact of those actions over periods ranging from 2 to 10 years.