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BUS 100 > Chapter 17 Financial Management > Flashcards

Chapter 17 Financial Management Flashcards

1
Q

Financial Management

A

The job of managing a firm resources to meet its goals and objectives

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2
Q

Financial Managers

A

Managers who examine the financial data prepared by accountants and recommended strategies for improving the financial performance of the firm

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3
Q

Short-Term Forcast

A

Forecast that predicts revenues, costs and expenses for a period of one year or less

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4
Q

Cash Flow Forecast

A

Forecast that predicts the cash inflows and outflows in future periods, usually months or quarters

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5
Q

Long-Term Forecast

A

Forecast that predicts revenues, costs, and expenses for a period longer than one year and as far as five or ten years in the future

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6
Q

Budget

A

A financial plan that sets forth managements expectations and allocates the use of specific resources throughout the firm

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7
Q

Operating Budget

A

The budget that ties together all of a firms other budgets and summarizes the businesses proposed financial activites

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8
Q

Capital Budget

A

A budget that highlights a firms spending plans for major asset purchases that often require large sums of money

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9
Q

Cash Budget

A

A budget that estimates a firms cash inflows and outflows during a particular period

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10
Q

Financial Control

A

A process in which a firm periodically compares its actual revenues, costs and expenses with projected ones

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11
Q

Capital Expenditures

A

Major investments in either tangible long-term assets such as land, buildings and equipment or intangible assets such as patents, trademarks and copyrights

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12
Q

Debt Financing

A

Funds are raised through various forms of borrowing that must be repaid

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13
Q

Equity Financing

A

Funds are raised from operations within the firm or through sole ownership in the firm

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14
Q

Short-term Financing

A

Borrowed funds that are needed for one year or less

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15
Q

Long-term Financing

A

Borrowed funds needed for a period longer than one year

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16
Q

Trade Credit

A

The practice of buying goods and services now and paying for them later

17
Q

Promissory Note

A

A written contract with a promise to pay

18
Q

Secured Loan

A

A loan backed by collateral, something valuable such as property

19
Q

Unsecured Loan

A

A loan that does not require collateral

20
Q

Line of Credit

A

A given amount of unsecured funds a bank will lend to a business

21
Q

Revolving Credit Agreement

A

A line of credit that is guaranteed but usually comes with a fee

22
Q

Commercial Finance Companies

A

Organizations that make short-term loans to borrowers who offer tangible assets of selling accounts

23
Q

Factoring

A

The process of selling accounts receivable for cash

24
Q

Commercial Paper

A

Unsecured promissory notes of $100,000 and up that mature in 365 days or less

25
Q

Term-loan Agreement

A

A promissory note that requires the borrower to repay loan in specified installments

26
Q

Risk/Return Tradeoff

A

The principle that the greater the risk a lender takes in making a loan the higher the interest rate required

27
Q

Bond

A

A long-term legal obligation of a corporation or government to make regular interest payments during the term of the bond and to repay the entire bond principle at the prescribed date

28
Q

Maturity Date

A

The exact date the issuer of a bond must pay the principle to the bond holder

29
Q

Debenture Bonds

A

Bonds that are unsecured (no collateral)

30
Q

Sinking Fund

A

A reserve account in which the issuer of a bond periodically sets aside some part of the bond principle prior to the maturity date so that enough capital will be accumulated by the maturity date to pay-off the bond

31
Q

Stocks

A

Shares of ownership in a company

32
Q

Initial Public Offer (IPO)

A

The first public offering of a corporations stock

33
Q

Stock Certificate

A

Evidence of stock ownership that specifies the name of the company, number of share and type of stock being issued

34
Q

Dividends

A

Part of a firms profits that may be distributed to shareholders as either cash payments or additional shares of stock

35
Q

Common Shares

A

The most basic form of ownership in a firm; its confers voting rights and the right to share in the firms profits through dividends, if offered by the firms board of directors

36
Q

Preferred Shares

A

Stock that gives its owners preference in the payment of the dividends and the earlier claim on assets than common shareholders if the company is forced out of business and its assets are sold

37
Q

Venture Capitalists

A

Money that is invested in new or emerging companies that are perceived as having great profit potential

38
Q

Leverage

A

Raising needed funds through borrowing to increase a firms rate of return

39
Q

Finance

A

The function in a business that acquires funds for the firm and manages them within the firm

BUS 100 (17 decks)

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