Ch 18 Flashcards
Planning for a firm’s money needs and managing the allocation and spending of funds
Financial Management
The balance of potential risks against potential rewards
Risk/Return Trade-Off
A document that outlines the funds needed for a certain period of time, along with the sources and intended uses of those funds
Financial Plan
Amounts that are currently owed to a firm
Accounts Receivable
Amounts that a firm currently owes to other parties
Accounts Payable
A planning and control tool that reflects expected revenues, operating expenses, and cash receipts and outlays
Budget
The process of analyzing and adjusting the basic financial plan to correct for deviations from forecasted events
Financial Control
Protecting against cost increases with contracts that allow a company to buy supplies in the future at designated prices
Hedging
A budgeting approach in which each department starts from zero every year and must justify every item in the budget, rather than simply adjusting the previous year’s budget amounts
zero based budgeting
A budget that identifies the money a new company will need to spend to launch operations
Start-Up Budget
Also known as the master budget, a budget that identifies all sources of revenue and coordinates the spending of those funds throughout the coming year
Operating budget
A budget that outlines expenditures for real estate, new facilities, major equipment, and other capital investments
Capital Budget
Money paid to acquire something of permanent value in a business
Capital Investments
A budget that identifies the costs needed to accomplish a particular project
Project Budget
Arranging funding by borrowing money
Dept Financing