Finance Skills for Managers - D076

Accounting - Answer- The system of recording, reporting, and summarizing past financial information and transactions. Accounts Receivable Turnover (AR Turnover) - Answer- An activity ratio found by credit sales divided by accounts receivable. Activity Ratios - Answer- A category of ratios that measure how well a company uses its assets to generate sales or cash, showing the firm's operational efficiency and profitability. Additional Funds Needed (AFN) - Answer- Another name for the discretionary financing needed or external financing needed. It represents the additional financing needed given a firm's expectations for future growth. Affirmative Covenants - Answer- A bond covenant that describes things the company pledges itself to do in order to protect bondholders. Agency Costs - Answer- Costs that are incurred when management does not act in the best interest of shareholders. Agency Problem - Answer- When the agent (the management) does not act in the best interest of the principal (the owners). Aggressive Assets - Answer- Companies or securities with beta greater than 1. Annual Percentage Rate - Answer- The annual interest rate that is charged for borrowing money or that is earned through investment. Annuity - Answer- A stream of cash flows of an equal amount paid every consecutive period. Annuity Due - Answer- A series of equal payments made at the beginning of consecutive periods. Asset Pricing - Answer- The process of valuing assets. Auction Market - Answer- A secondary market with a physical location and where prices are determined by investors' willingness to pay. Average Collection Period (ACP) - Answer- An activity ratio found by the number of days in a year (365) divided by AR turnover.