Notes, summaries, assignments, exams, and problems for Economics

What is Corporate Finance?

All activities related to obtaining resources under favorable conditions and their effective implementation to achieve company goals.

• Obtaining funds from advantageous sources, evaluating beneficial resources.
• Applying resources effectively.
• Financial planning: anticipating and providing resources.
• Financial control: monitoring resource performance.

Profit vs. Wealth Maximization

• Profit Maximization: Short-term focus on eliminating waste, proper maintenance, and quality raw materials.
• Wealth Maximization: Long-term focus on increasing share price and company value.

Conflicts Between Owners and Managers

• Managers have contractual wages, while owners have residual pay, leading to conflicts of interest.
• Owners may prefer higher-

Market Economy (Capitalism)

In a market economy, decisions are driven by the market itself, governed by the law of supply and demand. If consumer demand for a product falls, its production will be reduced. Resources and production methods are allocated based on efficiency, and goods are distributed to the highest bidder (those who can afford them).

Advantages

• Efficiency: High level of efficiency in its operations.
• Economic Liberty: Individuals and companies have the freedom to choose what to produce or consume.

Disadvantages

• Income and wealth are distributed very unevenly.
• The system is not always efficient and can lead to market failures.
• It is inherently unstable, leading to economic crises and unemployment.
• It creates artificial needs through advertising

Item 13. The Balance of Payments.
The current account, or merchandise trade balance: This includes the export and import of goods, excluding insurance. When a country exports a good, it increases the gross national disposable income for productive factors resident in the country. When goods are imported, gross national income is reduced.

• Account Services: Includes non-tangible product transactions and payments for the use of intangible assets. A surplus occurs when a country exports more services than it imports. The Spanish economy groups all service operations into tourism and other services.
• Income Accounts: Records financial capital income obtained in a country other than the owner's residence, as well as labor income obtained by individuals

From Autarky to Developmentalism: Spain's Economic Transformation (1939-1975)

The Autarkic Period in Spain (1939-1951)

After the Spanish Civil War, the Franco regime adopted an economic policy of autarky. This policy was highly dirigiste, interventionist, and characterized by isolation and self-sufficiency with regard to foreign markets. This resulted in widespread economic stagnation, shortages, famine, and the rationing of basic goods.

The adoption of autarkic policies was due to several factors:

• Significant material losses and the loss of human capital caused by the Civil War.
• Internal barriers, such as the Second World War.
• Condemnation of the Franco regime by the United Nations.

Both foreign trade and supplies hampered the opening of the Spanish...

Tax Legislation Explained

Taxes are charges paid in return for the provision of a service or the realization of an activity by the administration.

Special Contributions

These are derived from the collection by which an entity benefits or increases the value of its assets to finance specific works or projects.

Taxes: Classification

• Direct Taxation: Personal in character, taxing economic capacity. Examples: PIT (Personal Income Tax), IS (Corporate Tax), IAE (Economic Activities Tax).
• Indirect Taxation: Levied on the taxpayer's economic capacity as manifested in consumption. Example: VAT (Value Added Tax).

Elements of a Tax

• Chargeable Event: The legal or economic basis from which a tax obligation originates.
• Taxpayer: The natural or legal person obliged

Marketing Strategies and Distribution Channels

Discount Store Strategy: Buying large volumes at reduced margins to offer competitive prices.

Disjunctive Model: Consumers choose products that meet their primary needs, not necessarily all features.

Exclusive Distribution: Used by luxury manufacturers, limiting product availability to select stores, sometimes as part of a business partnership or investment.

Physical Distribution: The storage, handling, and movement of goods within an organization and their delivery to consumers.

Intensive Distribution: Making a product available in as many places as possible, primarily for frequently repurchased items.

Selective Distribution: Limiting product availability to a few stores, typically for specialty or...

Definition and Economic Role of Price

Price is the amount of money given in exchange for a certain amount of goods or service. Economically, the Price Mechanism is the method of market regulation, governed by the law of supply and demand.

Types of Prices (Appellations)

• Fees: Prices paid for the services of a professional (e.g., medical fees).
• Rates: Prices to pay for something, work, or public service (e.g., electricity tariffs).
• Wages: Basic pay for a period of time (weekly or annual) for administrative workers.
• Salary: Workers' basic pay plus bonuses and extras (weekly or monthly).
• Interest Rate: The price of money (price increases).
• Wholesale Prices: Prices that apply to wholesalers who purchase large quantities of a product or service.
• Authorized

Service Economy

It is an economic and social transformation that primarily affects developed countries since the last phase of the industrial revolution. It is not only that the employed population in the tertiary sector (services) becomes larger than the secondary sector (industry), but also how the work itself in this sector is increasingly disseminated and outsourced.

Welfare State

A more specific concept, which in practice is considered a category to designate either a set of proposals or a general approach regarding how the state should or could proceed. For example, the Spanish state provides education and healthcare.

Rural Tourism

A tourist activity that is performed in a rural area, usually in small towns or outside the village in larger...

Understanding the Accounting Function

The accounting function involves collecting and quantifying financial information generated within a company, then communicating it to end-users to facilitate informed decision-making.

Financial Accounting (External)

Financial accounting, or external accounting, records operations performed outside the company. It allows for the assessment of a company's assets, receivables, and debts, and facilitates the calculation of the company's overall financial results.

Cost Accounting (Internal)

Cost accounting records internal operations that occur within the company. It defines the gain or loss associated with each product and helps determine optimal production quantities.

The Balance Sheet: A Financial Snapshot

The...

Active Banking Operations

These operations involve banks lending resources to their clients. Clients undertake to return these resources plus the interest generated within the allotted time. These operations are reflected in a contract and supported by real or personal guarantees.

Common Active Operations

• Commercial bill discounting operations
• Loans
• Credits
• Bank guarantees

From a financial standpoint, active operations of credit institutions are classified into:

Classification by Term

• Short-term operations: Such as discounting operations, policy loans, etc. These are usually calculated using simple interest.
• Long-term operations: Such as loans in general. These are calculated using compound interest.

Personal Loans

These are granted after assessing the...