Chapter 1 Flashcards
What long-term investments or projects should be undertaken?
Capital Budgeting
What type of financing (debt financing or equity financing) should be used to pay for the investments?
Capital Structure
How will the day-to-day financial activities (cash receipts, disbursements, inventory, etc.) of the organization be managed?
Working Capital Management
What does the Controller do?
Financial accounting and management accounting, corporate taxes, financial transactions processing.
What does the Treasury do?
cash management, capital budgeting and financing decisions.
What are the three main types of business organizations?
Sole proprietorship, partnerships, and corporations.
What is a financial market?
Brings together buyers and sellers of debt and equity securities.
What is a Money market?
Short-term debt securities bought and sold.
What is a Capital market?
Long-term securities (debt and equity) are bought and sold.
What is a primary market?
Original sale of securities by the corporation.
What is a secondary market?
Stock and bond markets for securities previously issued.
What is the main goal of financial management?
Maximize owner’s equity.
