Final Exam: Ch 11 Flashcards
an obligation, such as a loan or bond that is paid back with interest
debt
providing a portion of the business in exchange for financing
equity
banks bring different parties together, such as savers and borrowers
financial intermediary
a asset of value, be used to secure the loan
collateral
larger business issuing debt, called commercial paper or a bond
corporate debt
represent ownership of a part of a business
stock
to make sure a business has proper funding
corporate finance
method of bringing cash that happens in the future, such as revenues 12 years from now and making it equivalent to present value of today’s money
net present value
measure of the current assets that are available to meet a business’ current liabilities, which are due less than a year
liquidity
loan that the business can use at some time in the future, acts as a credit card for expenses that the business believes might happen but doesn’t have enough info for a formal loan
line of credit
part of US federal government so loans can have lower interest rate, lower down payments, and lower collateral requirements
Small Business adminstration
for longer-term financing that be from 9 months to as long as 30 years
bonds
another source of funding, someone that invests their money into the business and takes on responsibility for managing and running the company
partners
funding that is provided by investors to a start-up earlier than other investors would, typically individuals, family members, friends, wealthy individuals
angel investing
funding that comes from another company, such as venture capital firm, a university funding a research idea to bring it to life
venture capital
primary path for financing is raising equity by issuing stocks
equity investments
make sure a business has proper financing
corporate finance
predicts what is coming in the future and what will be required
forecasting
first step in forecasting process to establish what is currently happening
baseline
internal actions that the business take to increase its revenues
drivers
something that is out of the direct control of the business, but they still must be planned for when possible
draggers
find the quantity of sales that are needed so that revenues are greater than the expenses, making the investment a driver
break-even analysis
the total cost of the investment is equal to the total revenues, piece of info to help forecasting
quantity break even point (qbep)
owners of a business, have a responsibility to their investors and shareholders to take care of the business and to explore all options and how they can impact the business
fiduciary duties
