Chapter 16 Flashcards
A high level corporate executive who manages a firms finances and reports directly to the companies chief executive officer of president
Chief financial officer (CFO)
Money that will be used for one year or less
Short-term financing
The movement of money into and out of an organization
Cash flow
The time lag between the actual production of goods and when the goods are sold
Speculative production
Money that will be used for longer than one year
Long-term financing
A ratio based on the principle that a high risk decision should generate higher financial returns for a business and more consecutive decisions often generate lower returns
Risk-return ratio
A plan for obtaining and using the money needed to implement an organizations goals and objectives
Financial plan
A financial statement that projects income, expenditures, or both over a specified future period.
Budget
A financial statement that estimates cash receipts and cash expenditures over a specified period
Cash budget
A budgeting approach in which every expense in every budget must be justified
Zero-base budgeting
A financial statement that estimates a firms expenditures for major assets and its long term financial needs
Capital budget
Money received from the owners or from the sales of shares of ownership in a business
Equity Capitol
Narrowed money obtained through loans of various types
Debt Capitol
A document stating that the bank will pay the depositor a gaurenteed interest rate on money left on deposit for a specified period of time
Certificate of deposit (CD)
A written order for a bank or or other financial institution to pay a stated dollar amount to the business or person indicated on the face of the check
Check
A loan that is approved before the money is actually needed
Line of credit
A guarenteed line of credit
Revolving credit agreement
Real estate or property pledged as security for a loan
Collateral
A card that electronically subtracts the amount of a customers purchase from his or her bank account at the moment the purchase is made
Debit card
A means of preforming financial transaction through a computer terminal
Electronic funds transfer (EFT) system
A legal document issued by a bank or other financial institution guaranteeing to pay a seller a stated amount for a specified period of time
Letter of credit
A written order for a bank to pay a third party a stated amount of money on a specific state
Bankers acceptance
Financing that is not backed by collateral
Unsecured financing
A type of short term financing extended by a seller who does not require immediate payment after delivery of merchandise
Trade credit
A written pledge by a narrower to pay a certain sum of money to a creditor at a specified future date
Promissory note
The lowest Rate charged by a bank for a short term loan
Prime interest rate
A short term promissory note issued by a large corporation
Commercial paper
A firm that specializes in buying other firms accounts receivable
Factor
Occurs when a corporation sells common stock to the general public for the first time
Initial public offering (IPO)
A market in which an investor purchases financial securities( via an investment bank) directly from the user of those securities
Primary market
An organization that assets corporations in raising funds usually by helping to sell new issues of stocks bonds or other financial securities
Investment banking firm
A market for existing financial securities that are traded between investors
Secondary market
A marketplace where member brokers meet to buy and sell securities
Securities exchange
A network of dealers who buy and sell the stocks of corporations that are not listed on a securities exchange
Over-the-counter (oTC) market
Stock whose owners may vote on corporate matters but whose claim on profits and assets is subordinate to the claims of others
Common stock
Stock whose owners usually do not have voting rights but whose claims on dividends and assets are paid before those of common stock owners
Preferred stock
The proportion of a corporations profits not distributed to stock holders
Retained earnings
Occurs when stock and other corporate securities are sold directly to insurance companies pension funds or large institutional investors
Private placement
The use of borrowed funds to increase the return on owners equity
Financial leverage
A promissory note that requires a narrower to repay a loan in monthy quarterly or semiannual or annual installments
Term-loan agreement
A corporations written pledge that it will repay a specified amount of money with interest
Corporate bond
The date on which a corporation is to repay barrowed money
Maturity date
A bond registered in the owners name by the issuing company
Registered bond
All the activities concerned with obtaining money and using it effectively
Financial management
A bond backed only by the reputation of the issuing corporation
Debenture bond
A corporate bond secured by various assets of the issuing firm
Mortgage bond
A bond that can be exchanged at the owners option for a specified number of shares of the corporations common stock
Convertible bond
A legal document that details all the conditions relating to a bond issue
Bond indenture
Bonds of a single issue that mature on different dates
Serial bonds
A sum
Of money to which deposits are made each year for the purpose of redeeming a bond issue
Sinking fund
An individual or an independent firm
That acts as bond owners representative
Trustee
