ETS Business Major Field Test: Corporate Finance
Corporations
A corporation is a legal form of business organization wherein the firm's owners or stockholder have limited liability.
Weighted Average Cost of Capital (WACC)
A company's assets are financed by either debt or equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances.
A firm's WACC is the overall required return on the firm as a whole and, as such, it is often used internally by company directors to determine the economic feasibility of expansionary opportunities and mergers (definition courtesy of Investopedia).
- WACC TutorialNYU Stern School of Business
Financial Ratios
- Financial Ratio Tutorial - InvestopediaDefinitions and formulas for 30 measurements divided into six main categories: Liquidity, Profitability, Debt, Operating Performance, Cash Flow Indicators, Investment Valuation.
- Analyzing Financial RatiosFormulas for:
Income Ratios
Profitability Ratios
Net Operating Profit Ratios
Liquidity Ratios
Working Capital Ratios
Bankruptcy Ratios
Long-Term Analysis
Coverage Ratios
Total Coverage Ratios
Leverage Ratios - Summary of Key Financial RatiosIncludes ratios for profitability, liquidity, leverage, activity, and dividends.