Falah Khokhar

Notation Pt = Stock Price at the End of Year t rE = Equity Cost of Capital n = Termination Date or Forecast Horizon g = Expected Dividend Growth Rate Divt = Dividends Paid in Year t EPSt = Earnings per Share on Date t PV = Present Value EBIT = Earnings before Interest & Taxes FCFt = Free Cash Flow on Date t Vt = Enterprise Value on Date t τc = Corporate Tax Rate rwacc = Weighted Average Cost of Capital gFCF = Expected Free Cash Flow Growth Rate EBITDA = Earnings before Interest, Taxes, Depreciat

Investors often use accounting statements to evaluate a firm in one of two ways: Compare the firm with itself by analyzing how the firm has changed over time. Compare the firm to other similar firms using a common set of financial ratios. Profitability Ratios Information used here comes from the income statement. Gross Margin This tells us a firm’s ability to sell a product for more than cost of producing it. Operating Margin This reveals how much a company earns before interest and taxes from

Current Liabilities, Contingent Liabilities, Financing with Debt vs. Equity Explain & Account for Current Liabilities What are Current Liabilities? Current liabilities are obligations due within 1 year, or within the company’s normal operating cycle if it’s longer than a year. Obligations due beyond that are long-term or non-current liabilities. 2 Kinds of Current Liabilities Known Amounts Estimated Amounts What are Current Liabilities of Known Amounts? Short-Term Borrowings: Companies sometimes

Key Concepts in Psychological Testing Psychological Test It is a standardized measure of a sample (potentially not representative) of a person’s behaviour. These tests are measurement instruments that measure the individual differences that exist among people in abilities, aptitudes, interests & aspects of personality. Two Principal Types of Tests Mental Ability Tests - Measure general mental ability. 3 Principle Sub-Categories: Intelligence Tests - Measure general mental ability and intellectua

Role of the Central Bank, Monetary Policy Tools, Challenges in Using Monetary Policy The Federal Reserve System What is a Central Bank? A bank responsible for the management of a nation’s money supply that typically serves as a regulator of the banking system. Its primary responsibility is to maintain a stable & effective monetary system. It also distributes currency, is responsible for the design and implementation of monetary policy, engages in bank supervisory activities, the setting of margi

Components of GDP, Forecast GDP, Equilibrium of Spending/Output, Spending Multiplier Gross Domestic Product What is Gross Domestic Product (GDP)? Gross Domestic Product is the value of all the final goods and services produced in a country within a specific time period. The total amount produced (total output or real GDP) equals the total amount of spending individuals & institutions want to do in a year plus the accumulation of inventories. Total output is equal to total income; wages, profits,

Aggregate Demand/Supply, Curve Shifts, Spending, Factors of Production, Employment What is a Recession? A period of significant decline in GDP growth rates & employment lasts more than a few months. Normally, during recessions, production falls, employment falls, and unemployment rises. Historically, inflation tended to rise before recessions and then fall during and after recessions. What is Aggregate Demand & Supply? Aggregate Demand: Total amount of products that consumers (foreign & domesti

Economic Growth, Standards of Living, Capacity, Economic Policies, Opportunity Costs What is Economic Growth? Economists’ Definition: An increase in the capacity to produce. Capacity is how much we can produce if we use all our resources. They use terms like full-employment real GDP, full-employment output, or the potential level of real GDP to refer to the amount we can produce when at full capacity. To economists, ‘economic growth’ is used to describe a movement of the production possibilities

Somniloquy - Is talking while sleeping. It’s like a soliloquy except done in someone’s slumber. Narcolepsy - Is a sleep disorder where people will randomly go to sleep during the day. The Nature of Consciousness Consciousness Is the awareness (with varying degrees) of internal & external stimuli. Our thoughts flow & fluctuate; William James named this flow the stream of consciousness. Variations in Awareness & Control Attention & consciousness are closely related but not identical. You can hav

Operations Management, Operation’s Value Chain, Operation’s Cycle What are ‘JIT’ Inventory Practices? Just-In-Time inventory is a productivity improvement practice of only having a strict appropriate amount of equipment in inventory for short-term production to ensure that nothing is being wasted. Making only what is needed, when it is needed & in the amount needed. What is Jidoka? If equipment malfunctions or a defective part (quality is not up to par) is detected, the affected machine automat

Business Strategy, Assessing Strategies, Planning Process, Strategy Challenges The Concept of Business Strategy In order for business growth & profitability, senior management must: Define & create a strategic direction and market position for the organization – Strategic Plan! Execute the core tactical initiatives within the plan in a manner that ensures success – Execute!

GDP, Income, Unemployment, Causes of Unemployment, Inflation, Consumer Price Index Gross Domestic Product: Meaning & Components What is the Gross Domestic Product (GDP)? The value of all the final products produced in a year. Economists use a variety of GDP measures to indicate economic progress. GDP figures are often used to define standards of living. The prices of each product is multiplied by the quantities of each good produced. All spending on every good is added up together. To avoid dupl

Organization Architecture, Centralization, Decentralization, Tall & Flat Structures Organization Architecture What is Organization Architecture (5 Parts of Organization Architecture)? The totality of a firm’s organization mechanisms: Organization Structures Vertical Differentiation: Location of decision-making responsibility (centralized or decentralized) & number of layers in a hierarchy (tall or flat). Horizontal Differentiation: Formal division into subunits (such as functions, R&D, national

The Big Picture Business is a system of intertwined actions that excels at selling a commodity to create wealth for stakeholders. Organizations must identify solutions to needs that the marketplace desires and create a mechanism for delivering it to the right person, at the right time & price. Business Foundation How efficient & effective an operation/business is can be assessed by its commercial endeavours, employee interactions & organizational efficiency & structure Commercial Endeavours Mark

What is Management? The art of getting things done through people. Not just doing the minimum, but pushing the limit. The 4 Functions of Management Planning & Strategizing Planning is about formalizing a strategy into steps to put into effect. It’s the process of: Choosing goals (goals) Identifying actions to attain the goals (actions to goals) Delegate responsibility for actions (delegate actions to goals) Measure success by comparing results against goals (measure success) Revise plans to achi

Elasticity, Effects of Price Changes, Price Floors/Ceilings, Taxes & Subsidies Price Elasticity of Demand (PED) How do you maximize revenue by deciding how much you should price your good? It depends on which is greater: the effect of the change in price or the effect of the change in quantity. Elasticity is a measure of the sensitivity of changes in one variable to changes in another. Elastic Demand is when a change in price causes a relatively large change in quantity demanded. We find the ela

Nervous System, Brain Researching Methods, Parts of the Brain, Evolutionary Bases Communication in the Nervous System What is the Nervous System? A living tissue composed of cells. Cells in nervous systems receive, integrate & transmit information. 2 Major Categories of Cells in the Nervous System Neurons: Individual cells in the nervous system that receive, integrate & transmit information. Basic link that permit communication in the nervous system. Vast majority communicate only with other neu

Modelling Sample Proportions What is True Proportion? Say we take many random samples of 1000 people and find the proportion of each sample being male. Let’s collect all those proportions into a histogram. Where would the centre of the histogram be? We don’t know. But it’s reasonable to think that it’ll be very close to the true proportion. We’ll likely never know the value of the true proportion, but it’s important so we give it a label (p). Using Simulations A computer can pretend to draw rand

Micro/Macro Economics, Scarcity, Opportunity Cost, Government Role A Structure (Micro vs. Macro) Microeconomics Study of markets, consumers, firms, sellers, workers and the governmental influence on outcomes of the market on an individual basis. Macroeconomics Study of the whole economy, by combining all decisions made by individuals into a big picture. Includes analyzing unemployment, inflation, economic growth, & policies affecting the economy. The Beginning of Economic Analysis Economists are

Prenatal Development, Childhood Development, Transition to Adolescence, Adulthood What is Development? The sequence of age-related changes that occur from conception to death. It’s a reasonably orderly, cumulative process that includes the biological & behavioural changes that take place as people age. Prenatal Development - Progress before Birth When does Conception Occur? Conception occurs when fertilization creates a zygote, a one-celled organism formed by the union of a sperm & an egg. Cell