INTRODUCTİON TO BUSİNESS

Financing decisions involve decisions about how much profit to distribute as well as how to finance the resources of the company. As businesses invest in assets to carry on their operations, they must make decisions regarding how to finance these resources.

The combination of internal funds and external funds creates the financing structure, in other words the capital structure of the company.

Operating decisions focus on the efficient use of resources to create competitive advantage in the market by developing effective and cost efficient systems and processes such as production, service, information, and technology.

Financial markets serve many roles among which are:
• Efficient allocation of capital
Financial markets help channel funds into profitable investments and boost economic growth
• Price discovery
Prices of financial assets are formed in the market by the interaction of demand and supply for these
securities.
• Liquidity
Investors can sell their investments and turn them into cash in financial markets. "Security" is not one of these roles or functions.

Financial markets can be classified as:
• Money markets: Markets where short-term securities like commercial paper and treasury bills are traded.
• Capital markets: Markets where long-term securities like bonds and stocks are traded.

They can also be classified as:
• Primary markets: Markets in which securities are offered for the first time.
• Secondary markets: Markets in which currently outstanding securities are traded. There is no such thing as a "tertiary market."

The 5 C's of credit are the following:

• Character. Banks evaluate the experience and track record of the business owners and managers
in the industry.
• Capacity. Capacity refers to considering your other debts when determining the ability to repay
the loan.
• Capital. Capital refers to the value of your assets less your liabilities. In simple terms, capital
reflects to how much you own (for example, car, real estate, cash, and investments) minus how
much you owe.
• Collateral. Collateral refers to any asset of a borrower a lender can use to pay the debt if the borrower is unable pay back the loan.
• Conditions. Banks may evaluate the industry and competition as well as general economic conditions.

"Contract" is not one of these 5 C's.

Preemptive rights gives the preferred stockholders the right to purchase new shares of stock proportionate with their existing share of ownership.

IRR is the discount rate that equates the present value of future cash flows with the initial outlay of the project. If the IRR is above the shareholders’ required rate of return, then the project should be accepted. However, if the IRR of the project is below the required rate of return, it should be rejected.

Market risk is "the risk that the value of an investment to fluctuate due to general market conditions."

Credit risk (Default risk) is defined as "the risk that a company or individual will not be able to pay the contractual interest or principal on its debt obligations".

• Operating decisions
Employing the resources of the business to efficiently generate profits.

The combination of internal funds and external funds creates the financing structure, in other words the capital structure of the company.

Financial markets serve many roles among which are:
• Efficient allocation of capital
Financial markets help channel funds into profitable investments and boost economic growth
• Price discovery
Prices of financial assets are formed in the market by the interaction of demand and supply for these securities.
• Liquidity
Investors can sell their investments and turn them into cash in financial markets.
• Risk Sharing

Working capital can be financed by:
• Accrued wages and salaries,
• Accrued taxes,
• Short-term loans provided from commercial banks, finance companies or factors,
• Issuing commercial papers (short-term promissory notes).

A budget is a plan to show how much money a person or organization will earn and how much they will need or be able to spend.

Collateral: Collateral refers to any asset of a borrower a lender can use to pay the debt if the borrower is unable pay back the loan

Net Present Value (NPV) shows the amount of wealth that is expected to be created if the project is undertaken.

• Operational risk
Various risks that can arise from a company’s ordinary business

CFROI metric is rooted on the discounted cash flow valuation (Madden, 1999).19 Thus:
1. More cash is preferred to less.
2. Cash has a time value.
3. Sooner is preferred to late.
4. Less uncertainty is better

Capital Markets Board of Turkey’s Corporate Governance Principles consist of four main sections, namely shareholders, disclosure and transparency, stakeholders and board of directors