Module 8 Flashcards
What is financial management?
Management that deals with financial resources and assets to meet goals and objectives of the company/business
What is the goal of financial managers?
They analyze data prepared by accountants. Using this data, they develop financial plans and manage/monitor the execution of financial plans to maximize wealth.
Explain Long term forecasting
predicting costs, revenues and expenses for a period of more than a year
Explain short term forecasting
predicting costs, revenues and expenses for a period of one year or less
What are the three budgets in financial planning?
1 Operating (master budget)
#2 Capital budget
#3 Cash budget
Explain operating (master) budget
ties together all company budgets, together
Explain capital budget
plans for major asset purchases
Explain cash budget
all projected cash inflow/inflows
What is the purpose of operating funds?
to manage day-to-day needs of a business (example: Monthly expenses or cash for unexpected emergencies)
What are the three sources of funds
- operations
- debit financing
- equity financing
What is operations funding
funding that comes from the companys profits
What is debt financing
from creditors (loans)
What is equity financing
Using money from the owner(s) capital or owner(s) personal contributions
What are the list of short term financing ways (debits)
- line of credit
- banks or other financial institutions (short term loans)
- family and friends
- trade credit or company credit cards
- factoring A/R
What is factoring A/R?
this is when you sell accounts receivable to a factor for cash
