Key Terms Balance sheet
Several crucial concepts are fundamental
1.2a Sources of Finance
Balance sheet
Assets
Liabilities
Equity
FIGURE 1.3 A Balance Sheet for Corporation X
1.2b Risk and Return
Return
Another investor may place funds in a
Why must an investor weigh up the risk against the return?
The Risk
Risk
The Relationship Between Risk and Return
1.2c Financial Leverage
Financial leverage
after a period of time. If the borrower can earn a higher
Why must a borrower aim to earn a higher return than they have agreed to pay the lender?
Financial analysis is built on assumptions.