Chapter 16 Flashcards
A high level corporate executive who manages a firms finances and reports directly to the companies chief executive officer of president
Chief financial officer (CFO)
Money that will be used for one year or less
Short-term financing
The movement of money into and out of an organization
Cash flow
The time lag between the actual production of goods and when the goods are sold
Speculative production
Money that will be used for longer than one year
Long-term financing
A ratio based on the principle that a high risk decision should generate higher financial returns for a business and more consecutive decisions often generate lower returns
Risk-return ratio
A plan for obtaining and using the money needed to implement an organizations goals and objectives
Financial plan
A financial statement that projects income, expenditures, or both over a specified future period.
Budget
A financial statement that estimates cash receipts and cash expenditures over a specified period
Cash budget
A budgeting approach in which every expense in every budget must be justified
Zero-base budgeting
A financial statement that estimates a firms expenditures for major assets and its long term financial needs
Capital budget
Money received from the owners or from the sales of shares of ownership in a business
Equity Capitol
Narrowed money obtained through loans of various types
Debt Capitol
A document stating that the bank will pay the depositor a gaurenteed interest rate on money left on deposit for a specified period of time
Certificate of deposit (CD)
A written order for a bank or or other financial institution to pay a stated dollar amount to the business or person indicated on the face of the check
Check
A loan that is approved before the money is actually needed
Line of credit
A guarenteed line of credit
Revolving credit agreement
Real estate or property pledged as security for a loan
Collateral
A card that electronically subtracts the amount of a customers purchase from his or her bank account at the moment the purchase is made
Debit card
A means of preforming financial transaction through a computer terminal
Electronic funds transfer (EFT) system
A legal document issued by a bank or other financial institution guaranteeing to pay a seller a stated amount for a specified period of time
Letter of credit
A written order for a bank to pay a third party a stated amount of money on a specific state
Bankers acceptance
Financing that is not backed by collateral
Unsecured financing
A type of short term financing extended by a seller who does not require immediate payment after delivery of merchandise
Trade credit
