Financial Management Flashcards
Seasonal Dating
Procedure for inducing customers to buy early by not requiring payment until selling season begins
Financial Management Main Functions
(1) Financing function
(2) Capital budgeting function
(3) Financial management function
(4) Corporate government function
(5) Risk management function
Financial Management Financing Function
Raising capital necessary to fund a business
Financial Management Capital Budgeting Function
Choosing the best long term projects to which to dedicate firms resources based on projects expected risks and returns
Financial Management Function
Managing the business’s internal cash flows and capital structure, minimizing financing costs, and ensuring obligations can be paid when due
Financial Management Corporate Governance Function
Making sure managerial behavior is ethical and in the interest of business owners
Financial Management Risk Management Function
Identifying and managing the business’s various kinds of risk
Cash Conversion Cycle
Measures the number of days when a business pays for inputs to when the business collects cash from the resulting sale of finished goods
Prime Rate
Rate each lender charges most credit worthy customers
London Interbank Offered Rate (LIBOR)
Common base rate for many business loans abroad and in US - computes rates for many short term maturities and currency
Public Debt
Business obligations that may be readily resold to general public in markets that SEC regulates
Eurobonds
Bonds denominated in US dollars that are sold abroad
Debt Covenants
Restrictions on financial behavior
Positive Covenants
Stipulates things a borrower must do
Negative Covenants
Stipulate what the borrower may not do
