Introduction to business Chapter 16 - Financial Management + Lecture
Financial management - ANS-All the activities that deal with obtaining money and using it effectively Chief financial officer - ANS-A top level corporate executive who manages finances and reports to the president Short term financing - ANS-Money that will be used in a year or less Long term financing - ANS-Money that will be used for longer than a year Risk-return ratio - ANS-A high risk decision should generate a higher financial return Establishing goals, budgeting, identify sources of finance - ANS-Process of financial budgeting Zero base budgeting - ANS-Every expense in every budget is justified Capital budgets - ANS-Predicts a firm's expenses on major assets Sales, equity capital, debt capital, sales of assets - ANS-Sources of capital Line of credit - ANS-Loan approved before the money is needed; allows for easy access Revolving credit agreement - ANS-Continuous line of credit; bank guarantees money to be available when needed Traditional business services - ANS-Savings and checking accounts, business loans, credit/debit card trasactions Letter of credit - ANS-A legal document from the bank promising to pay certain amount for a certain period of time Banker's acceptance - ANS-A written order for the bank to give money to the third party Short term debt financing - ANS-Unsecured financing, secures financing Trade credit - ANS-Arrangement to buy goods without paying immediately after delivery Promissory note - ANS-Written order to pay a certain amount of money to a creditor Continues...
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