chief financial officer (CFO)
the top financial manager within a firm; the overseer
treasurer
oversees cash management, credit management, capital expenditures, and financial planning
controller
oversees taxes, cost accounting, financial accounting, and data processing
sole proprietorship
business owned by one person
- easiest to start
- least regulated
- owner keeps profits
- taxed once
- unlimited liability
- transfer of ownership is very hard
partnership
business owned by two or more persons
- easy to start
- taxed once as personal income
- unlimited liability for GPs
- limited partners don't manage
- difficult to transfer ownership
corporation
a legal entity distinct from owners and a resident of a state
- harder to start
- easier to raise capital
- unlimited life
- transfer of ownership is easy
- double taxation
- separation of ownership and management
book value
the balance sheet value of the assets, liabilites, and equity
market value
the price at which the assets, liabilities, or equity can actually be bought or sold now
GAAP matching principle
recognize revenue when it is fully earned, not necessarily when the cash is received and match expenses required to generate revenue to the period of recognition
noncash items
expenses changed against revenue that do not affect cash flow
marginal (statutory) rate
% tax paid on the next dollar earned
average (effective) rate
total tax bill/taxable income
default risk premium
bond ratings
taxability premium
municipal vs. taxable
liquidity premium
bonds that have more frequent trading generally have lower required returns
maturity premium
longer term bonds will tend to have higher required returns
term structure
the relationship between time to maturity and yields, all else equal