incremental cash flow
difference between the cash flows a company will produce both with and without the investment it is thinking about making
opportunity cost
cost of making a choice in terms of the next best alternative that must be foregone
efficient market
market in which the prices of securities at any instant in time fully reflect all publicly available information about the securities and their actual public values
agency problem
problems and conflicts resulting from the separation of the management and ownership of the firm
capital budgeting
decision-making process with respect to investment in fixed assets
capital structure decision
decision-making process with funding choices and the mix of long-term sources of funds
working capital management
management of the firm's current assets and short-term financing
financial markets
those institutions and procedures that facilitate transactions in all types of financial claims
sole proprietorship
a business owned by a single individual
partnership
an association of tow or more individuals joining together as co-owners to operate a business profit
general partnership
a partnership in which all partners are fully liable for the indebtedness incurred by the partnership
limited partnership
a partnership in wihch one or more of the partners has limited liability, restricted to the amount of capital he or she invests in the partnership
corporation
an entity that legally funcitons separate and apart from its owners
S-corporation
a corporation that, because of specific qualifications, is taxed as though it were a partnership
limited liability company (LLC)
a cross between a partnership and a corporation under which owners retain limited liability but the company is run and is taxed like a partnership