Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
33 Cards in this Set
- Front
- Back
Finance |
The function in a business that acquires funds for the firm and manages those funds within the firm. |
|
Financial Management |
The job of managing a firm's resources so it can meet its goals and objectives. |
|
Financial Managers |
Managers who examine financial data prepared by accountants and recommend strategies for improving the financial performance of the firm. |
|
Short-term Forecast |
Forecast that predicts revenues, costs, and expenses for a period of one year or less. |
|
Cash Flow Forecast |
Forecast that predicts the cash inflows and outflows in future periods, usually months or quarters. |
|
Capital expenditures |
Major investments in either tangible long-term assets such as land, buildings, and equipment or intangible assets such as patents, trademarks, and copyrights. |
|
Long-term Forecast |
Forecast that predicts revenues, costs, and expenses for a period longer than a year, and sometimes as far as five years or even 10 years into the future. |
|
Budget |
A financial plan that sets forth management's expectations and, on the basis of those expectations, allocates the use of specific resources throughout the firm. |
|
Capital Budget |
A budget that highlights a firm's spending plans for major asset purchases that often require large sums of money |
|
Cash Budget |
A budget that estimates cash inflows and outflows during a particular period like a quarter or a month. |
|
Operating (or Master) Budget |
The budget that ties together the firms other budgets and summarizes its proposed financial activities. |
|
Financial Control |
A process in which a firm periodically compares its actual revenues, costs, and expenses with its budget. |
|
Debt Financing |
Funds raised through various forms of borrowing that must be repaid. |
|
Equity Financing |
Money raised from within the firm, from operations or through the sale of ownership in the firm (stock or venture capital). |
|
Short-term Financing |
Funds needed for a year or less. |
|
Long-term financing |
Funds needed for more than a year; usually 2-10 years. |
|
Trade Credit |
The practice of buying goods and services now and paying for them later. A form of short-term financing. |
|
Promissory Note |
A written contract with a promise to pay a supplier a specific sum of money at a definite time. A form of short-term financing. |
|
Secured Loan |
A short-term loan; a loan backed by collateral, something valuable such as property. |
|
Unsecured Loan |
A short-term loan; a loan that doesn't require any collateral. |
|
Line of Credit |
A short-term loan; a given amount of unsecured short-term funds a bank will lend to a business, provided the funds are readily available. |
|
Revolving Credit Agreement |
A short-term loan; A line of credit that's guaranteed but usually comes with a fee. |
|
Commercial Finance Companies |
Organizations that make short-term loans to borrowers who offer tangible assets such as collateral. |
|
Factoring |
The process of selling accounts receivable for cash. |
|
Commercial Paper |
Unsecured promissory notes of $100,000 and up that mature (come due) in 270 days or less. |
|
Term-Loan Agreement |
A promissory note that requires the borrower to repay the loan in specified installments. |
|
Risk/Return Trade-off |
The principle that the greater the risk a lender takes in making a loan, the higher the interest rate required. |
|
Indenture Terms |
The terms of agreement in a bond issue. |
|
Secured Bond |
A bond issued with some form of collateral. |
|
Unsecured Bond |
A bond backed only by the reputation of the issuer; also called a debenture bond. |
|
Venture Capital |
Money that is invested in new or emerging companies that are perceived as having great profit potential. |
|
Leverage |
Raising needed funds through borrowing to increase a firms rate of return. |
|
Costs of capital |
The rate of return a company must earn in order to meet the demands of its lenders and expectations of its equity holders. |