Cours du 30/09/2010
Examen : Questionnaire fait en 30 minutes (début janvier) portant sur des définitions (20 termes anglais, mettre en une ligne ce que cela veut dire).
1. Internal financing versus external financing
Internal financing = retained earnings + depreciation (amortissement) and allowances (prévisions).
Net income (income statement) = this will be used todistribute dividends and retained earnings. In the USA the General Assembly of Stockholders decides the amount of dividends and retained earnings. Managers prefer retained earnings because retained earnings are used for investment. Usually, there is a conflict between stockholders and managers about the use of the net income.
In the USA, there are three juridical categories of firms:
* The firstcategory is called the sole entrepreneurship (entreprise individuelle ou en droit enterprise unipersonnelle). So one people owe the firm and there is only one person in cause in case of bankruptcy. And all the earnings of the corporation are the earnings of the manager.
* The second is partnership (société en nom collectif (SNC)). In a partnership there are different partners and each partner isresponsible in case of bankruptcy = if one partner cannot pay, the others partners must pay for him.
* The third is called corporation (société anonyme ou société de capitaux). The corporation belongs to stock/shareholders (actionnaires) and a stockholder is responsible only for the amount invested in the corporation (responsible dans la limite de ses apports).
It is sometime useful to make adistinction between two kinds of corporation in the USA. There are two different kinds of corporation:
* Private corporation
A private corporations is a corporation that is not listed on financial markets = closed-end corporations (des sociétés à capitaux fermés). That means that there is a limited number of shareholders, usually members of the family or friends, and they want to keep thecorporation under their own control.
* Public corporations
In the USA, public corporations are corporations that are listed on financial markets = open-end corporations. In public corporation, there is a large number of shareholders who are private investors or bencher funds or investment funds… But banks cannot be banks because there are not allowed to be shareholders in a corporation.Balance sheet = Liabilities and equity
Borrowing by banks
Bounds external financing which is used to
Equity buy long-term assets
In this lecture, we will study external financing. In the USA, public corporations find their financing on financial markets. Approximately, 70% persons oflong-term financing of public corporation are made of bonds and stocks. We will study here public corporation that used capital market. About 80% of persons of this financing are made of bonds, and 20% of stocks.
2. Financial market or stock exchanges
There are different ways of defining stock exchanges.
Make a distinction between national market and regional markets.
A national markets isa federal market for all the USA and abroad. National markets and multinational corporations will be listed on national markets. In the USA, there are three national markets in New City Stock Exchange (NYSE), in Wall Street. There are about 3000 listed corporations on this market. The second one is the NASDAQ which is also located in Manhattan and there is about 2000 corporations listed in thismarket. Usually there are new corporations in high-technology. The third one is American stock exchange (AMEX) which is also located in New York and 1000 corporations are listed on this market.
Apart from this market, there are regional markets in which regional corporations are listed. There is one regional market in each state of the USA. The most important ones are Chicago, Boston, and...
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