INFLEUNCES ON FINANCIAL MANAGEMENT Flashcards
Internal source of finance - owners equity
The funds contributed by the owner/s to establish the business
Internal source of finance - Retained profits
the total amount of profits the company had retained in the business
overdraft
Bank allows business to overdraw their account for an agreed limit for a specified time.
commercial bills
A loan of 100,000+ issued by financial insitituitions
- funds must be paid within 30-180 days
Factoring
the selling of accounts receivable at a discounted price to financial companies or factoring companies.
Mortgage
a loan secured against an asset being purchased (property)
Debentures
A loan to a business by an investor secured against an asset
Unsecured note
A loan to a business by an investor not secured against an asset
Leasing
paying another party/business to use their equipment
New issues
Securities issued and sold for the first time
Rights issue
Opportunities for shareholders to buy more shares
placements
Shares offered to selected investors at a discount
- intention to persuade certain investors
Share purchase plans
offerings made to existing shareholders to purchase more shares without brokerage fees
What are the financial institutions
Banks
investment companies
finance companies
superannuations funds
life insurance companies
unit trusts
ASX
The influence of the government
influences a business’s financial management with economic policies (monetary and fiscal) and through the implementation of legislation.
AUSTRALIAN SECURITIES AND INVESTMENT COMMISSION (ASIC) - enforces and administers legislation
COMPANY TAXATION - all private and public companies must pay company tax on their profits as it is an essential source of funding for the government that allows them to provide essential resources/services.
