In this week's class , the topic is Chapters 12-14 which cover Capital Structure, Distribution of Retained Earnings: Dividends and Stock Repurchases and Working Capital Policy. A firm's basic financial resource is the stream of cash flows produced by its assets and operations. If the firm is financed entirely by common stock, all the cash flows belong to the stockholders. When it issues both debt and equity, the firm splits the cash flows into two streams, a relatively safe stream that goes to the debt holders and a more risky one that goes to the stockholders. You will see that in some industries, companies borrow much more heavily than in others. Most high-tech firms rely almost wholly on equity finance while hotels and airlines rely much more on debt than on equity.Chapter 12 takes a look at the firm's capital structure, and things such as taxes, bankruptcy, and the signals your financing decisions may send to investors. Chapter 13 covers distribution of Retained Earnings which answers the question "How much should a corporation pay out in a given year? Should the payout come as dividends or share repurchases?" You will learn how dividends are paid and how firms repurchase their stock and why dividend increases usually convey good news to investors and why dividend cuts convey bad news. Finally, Chapter 14 covers working capital policy

This week's assignment is to watch 2 videos about working capital. Please discuss what you learned from the videos and in addition, please use Finance books or other sources (such as the internet) to describe in greater detail the components of working capital and how firms manage them.

Please make sure you complete all requirements described in the assignment. Your posting should be in your own words and at least 200 words. Please proofread before submitting

http://www.youtube.com/watch?v=2yrI2sM8LhI

http://www.youtube.com/watch?v=C0UOvhnIqxE