Questions and Answers
What is Economics?
Economic choices are influenced by which of the following?
What does Scarcity refer to?
Teams don't move to every metropolitan area due to league restrictions.
What can be defined as Microeconomics?
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What does Macroeconomics study?
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Which of the following refers to Wealth Maximization?
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A Sole Proprietorship has unlimited liability.
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Partnerships are free from personal liability.
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What are advantages of an S Corp?
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What is a Stock Market?
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Define Fiscal Policy.
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What is meant by Depreciation?
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What is Debt?
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Match the following financial concepts with their definitions:
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Which of the following are types of budgeting?
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Inflation leads to an increase in purchasing power.
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What does Interest Rate refer to?
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Define Opportunity Cost.
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What is meant by Price in economics?
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What does Economic Cycle include?
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What are major sources of Debt?
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Study Notes
Economics and Choices
- Economics is the study of allocating scarce resources.
- Economic choices are influenced by demand, scarcity, surplus, and price.
Scarcity
- Sports teams are limited in metropolitan area moves due to league regulations.
- Franchise movement aims to avoid close proximity to maintain competitive balance.
Microeconomics vs. Macroeconomics
- Microeconomics focuses on issues at the firm level, including supply, demand, and pricing.
- Macroeconomics deals with broader economic factors like income, unemployment, and inflation.
Business Structures
- Sole Proprietorship: Easily created, managed but has personal liability issues.
- Partnership: Similar advantages but potential for management disputes and personal liability.
- S Corporation: Offers limited liability and flow-through taxation but has restrictions on investors and operational costs.
- LLC/LLP: Provides limited liability and flow-through taxation but has undefined state standards.
- C Corporation: Permits unlimited investors and classifications of stock but suffers from double taxation.
Stock Market and Financial Management
- Stock market involves buying and selling stocks of public businesses.
- Financial management includes decision-making regarding the acquisition and use of funds.
Government Influence and Fiscal Policies
- Monetary Policy controls money supply and interest rates.
- Fiscal Policy involves government spending to influence economic conditions.
Depreciation and Taxation
- Depreciation allocates an asset’s loss of value over time.
- Jock Tax is an income tax on visiting athletes earning money in a jurisdiction.
Capital and Financial Metrics
- Debt is borrowing that must be repaid over time, often with interest.
- Equity involves exchanging ownership shares for funding.
- Retained earnings represent reinvestments of previous profits.
Budgeting Techniques
- Zero-Based Budgeting eliminates the previous budget as a baseline, justifying all expenses anew.
- Modified Zero-Based Budgeting aligns spending levels with service needs.
Types of Budgets
- Revenue Budget forecasts projected sales revenues.
- Expense Budget allocates dollars to specific activities.
- Cash Budget projects cash on hand and needed for expenses.
Financial Ratios and Performance
- Key financial ratios, like current and quick ratios, indicate an organization's ability to meet liabilities.
- Net profit margin measures profitability as a percentage of overall sales.
- Return on Equity indicates the financial yield to shareholders.
Risk Assessment
- Risks include economic decisions, political developments, and global issues.
- Stand-alone risk considers investment risk individually rather than within a portfolio.
Investments and Financing
- Investments focus on security choices of individual and institutional investors.
- Major sources of debt include loans and corporate bonds.
Taxation and Revenue Bonds
- Vertical equity concerns taxpayer ability to pay taxes.
- Horizontal equity ensures individuals with similar incomes pay similar taxes.
- Revenue bonds are paid off from specific sources like hotel taxes.
Special Considerations
- Tourism taxes affect services related to hospitality.
- Public financing includes government spending for facilities and infrastructure.
- Inflation indicates loss of purchasing power over time.
Enhancement of Assets
- Annuities involve periodic payments for investments over time.
- Liquidity refers to how quickly an asset can be converted to cash.
Depreciation Methods
- Straight-line depreciation spreads the cost evenly over an asset's useful life.
- Sum of years method accelerates depreciation at the beginning of the useful life.
- Units of production method calculates depreciation based on actual production output.
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Description
Explore essential concepts in the finance of sports through flashcards focusing on economics and decision-making. This quiz covers important terms like scarcity and microeconomics, and their relevance in the sports industry. Perfect for students of sports management and finance!
