Debt Financing WOB Test 3 Flashcards Preview

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Flashcards in Debt Financing WOB Test 3 Deck (16):
1

Financial Management

Planning for a firms money needs

2

What is the goal of a Financial Manager?

Maximize value of firm to its owners

3

What is another term that means - Maximize value of firm to its owners

Maximize shareholder value

4

What are the 3 fundamental concepts of financial management?

- balancing short term and long term demands
- balancing potential risks and rewards
- balancing leverage and flexibility

5

Debt Financing

Arrange funding of borrowed money

6

Equity Financing

Arrange funding by selling other shares

7

Short term Financing

Covers current expenses repaid within a year

8

Long term Financing

Covers long term expenses repaid over a period more than a year

9

Leverage

Increasing rate of return by financing with borrowed funds

10

Capital Structure

Firms mix of debt and equity financing

11

What are the 5 Cs of credit scores?

Character
Capacity
Capital
Conditions
Collateral

12

Bonds

Form of debt that has interest

13

Coupon interest rate

Percentage of par value paid out annually

14

Par value

Amount returned to bond owner at time of maturity

15

Maturity

Length of time until bond issuer returns value to bond holder

16

Why would you issue debt

To generate cash

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