Ch. 17 (2) Flashcards
list the four areas in which all organizations need readily available funds
managing day-to-day needs of the business, controlling credit operations, acquiring needed inventory and making capital expenditures
the challenge of sound financial management is …
to see that funds are available to meet these daily cash needs
the major problem with selling on credit is that …
a large percentage of a non-retailer’s business assets could be tied up in its credit accounts
effective marketing implies …
a clear customer orientation
to satisfy customers, businesses must …
maintain inventories that often involve a sizable expenditure of funds
what are capital expenditures?
major investments in either tangible long-term assets such as land buildings, and equipment, or intangible assets such as patents, trademarks and copyrights
Alternative Sources of Funds:
list five short-term funds
monthly expenses, unanticipated emergencies, cash flow problems, expansion of current inventory and temporary promotional programs
Alternative Sources of Funds:
list five long-term funds
new-product development, replacement of capital equipment, mergers or acquisitions, expansions into new markets and new facilities
debt financing refers to …
funds raised through various forms of borrowing that must be repaid
equity financing is …
money raised from operations within the firm or through the sale of ownership in the firm
trade credit is …
the practice of buying goods or services now and paying for them later
a promissory note is …
a written contract with a promise to pay a supplier a specific sum of money at a definite time
a secured loan is a loan that …
is backed by something valuable, such as property
an unsecured loan …
doesn’t require a borrower to offer the lending institution any collateral to obtain the loan
a line of credit is …
a given amount of unsecured funds a bank will lead to a business
a revolving credit agreement is …
a line of credit that is guaranteed
list the four Cs of credit
character, capacity, capital and conditions
factoring is the process of …
selling accounts receivable for cash
commercial paper consists of …
unsecured promissory notes, in amounts of $100k and up, that mature (come due) in 365 days
