Flashcards in Understanding Business Chapter 18 Deck (33):
The function in a business that acquires funds for the firm and manages those funds within the firm.
The job of managing a firm's resources so it can meet its goals and objectives.
Managers who examine financial data prepared by accountants and recommend strategies for improving the financial performance of the firm.
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.
Forecast that predicts revenues. costs. and expenses for a period longer that 1 year. and sometimes as far as 5 or 10 years into the future.
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.
A budget that highlights a firm's spending plans for major asset purchases that ofter require large sums of money.
A budget that estimates cash inflows and outflows during a particular period like a month or a quarter.
Operating (or master) Budget
The budget that ties together the firm's other budgets and summarizes its proposed financial activities.
A process in which a firm periodically compares its actual revenues. costs. and expenses with its budget.
Major investments in either tangible long-term assets such as land. buildings. and equipment or intangible assets such as patents. trademarks. and copyrights.
Funds raised through various forms of borrowing that must be repaid.
Money raised from within the firm. from operations or through the sale of ownership in the firm (stock or venture capital).
Funds needed for a year or less.
Funds needed for more than a year (usually 2 to 10 years).
The practice of buying goods and services now and paying for them later.
A written contract with a promise to pay a supplier a specific sum of money at a definite time.
A loan backed by collateral. something valuable such as property.
A loan that doesn't require any collateral.
Line of Credit
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 line of credit that's guaranteed but usually comes with a fee.
Commercial Finance Companies
Organizations that make short-term loans to borrows who offer tangible assets as collateral.
The process of selling accounts receivable for cash.
Unsecured promissory notes of $100.000 and up that mature (come due) in 270 days or less.
A promissory note that requires the borrower to repay the loan in specified installments.
The principle that the greater the risk a lender takes in making a loan. the higher the interest rate required.
The terms of agreement in a bond issue.
A bond issued with some form of collateral.
A bond backed only by the reputation of the issuer. also called a debenture bond.
Money that is invested in new or emerging companines that are perceived as having great profit potential.
Raising needed funds through borrowing to increase a firm's rate of return.