Business - Chapter 16

  1. Financial Managers
    Responsible for planning and overseeing the financial resources of a firm
  2. Finance
    The business function involving decisions about firm's long-term investments and obtaining the funds to pay for those investments
  3. Cash Flow Management
    Managing the pattern in which cash flows into the firm in the form of revenue and out of the firm in the form of debt payments.
  4. Financial Control
    The process of checking actual performance against plans to ensure that the desired financial status is achieved.
  5. Financial Plan
    A description of how a business will reach some financial position it seeks for the future.
  6. Short Term (Operating) Expenditures
    • Account Payable
    • Account Receivable
    • Inventoreries
  7. Stages of Inventory
    • Raw material Inventory
    • Work in Process
    • Finished goods inventory
  8. Credit Policy
    Rules governing a firm's extension of credit to customer
  9. Inventory
    Materials and goods currently held by the company that will be sold within a year.
  10. Sources of Short-Term Funds
    • Trade Credit
    • Secured Short-Term Loan
    • Unsecured Short-Term Loan
  11. Trade Credit
    The granting of credit by a selling firm to a buying firm
  12. Open book Credit
    Form of trade credit in which sellers ship merchandise on faith that payment will be forthcoming.
  13. Promissory Note
    Form of trade credit in which buyers sign promise to pay agreements before merchandise is shipped.
  14. Trade Draft
    Form of trade credit in which buyers must sign statements of payment terms attached to merchandise by sellers.
  15. Secured Loans
    A short-term loan in which the borrower is required to put up collateral.
  16. Unsecured loan
    Short-term loan in which
  17. Unsecured Loan
    The short-term loan in which the borrower is not required to put up collateral.
  18. Commercial Paper
    A method od short-run fund-raising in which a firm sells unsecured notes for less than the face value and then repurchases them at the face value within 270 days.
  19. Line of Credit
    A standing agreement between a bank and a firm.
  20. Dept Financing
    Raising $ to meet long-term expeditures by borrowing from the outside of the company.
  21. Corporate Bond
    A promise by the issuing company to pay the holder a certain amount of money on a specified date
  22. Equity Financing
    Raising $ to meet long-term expenditures by issuing common shares or by retaining earning.
  23. Hybrid Financing: Preferred Stock
    • Required fixed payments as do bonds
    • unlike bonds they dont have a maturity date
    • shareholders receive a dividend if the firm can afford it.
    • preferred shareholders get paid first

    No voting rights
  24. Venture Capital
    External equity funding provided in return for part ownership in the borrowing firm.
  25. Risk Management Process
    • Identify Risks
    • Measure impact on firm
    • Evaluate Alternatives
    • Implement Program
    • Monitor Results
  26. Risk
    uncertaintly about future events
  27. Speculative risk
    The chance for gain or loss
  28. Pure Risk
    only chance of loss (fire in the warehouse)
  29. Risk Avoidance
    Refusing to participate in risky ventures
  30. Risk Control
    Techniques to prevent losses or minimize their impact
  31. Risk Retention
    covering a firm's unavoidable losses with its own funds
  32. Risk Transfer
    transferring risk to another firm, individual , often by contract.
  33. Capital Struture
    Relative mix of a firm's dept and equity financing
  34. Risk-return relationship
    Shwos the amount of risk and the likely rate of return on various financial instruments
Card Set
Business - Chapter 16
Kwantlen University