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Finance and Financial Management: Terms and Concepts, Quizzes of Business Research Methods for Managers

Definitions and explanations for various terms and concepts related to finance and financial management. Topics include budgeting, financial planning, financial management, financial managers, debt financing, equity financing, trade credit, promissory notes, secured loans, unsecured loans, lines of credit, revolving credit agreements, long-term financing objectives, term-loan agreements, indenture terms, secured bonds, unsecured bonds, securing equity financing, attracting venture capital, leverage, and cost of capital.

Typology: Quizzes

2011/2012

Uploaded on 04/03/2012

truegamergirl
truegamergirl 🇺🇸

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TERM 1
Finance
DEFINITION 1
The function in a business that acquires funds for a firm and
manages them within the firm Finance activities include:
Preparing budgets Creating cash flow analyses Planning for
expenditures
TERM 2
Financial Management
DEFINITION 2
The job of managing a firms resources to meet its goals and
objectives
TERM 3
Financial
Managers
DEFINITION 3
Examine financial data and recommend strategies for
improving financial performance Two key responsibilities:
Obtain funds Effectively control the use of those funds Other
responsibilities: paying bills, overdue collections, staying
abreast of tax law, and internal auditing of financials (lots of
accounting overlap)
TERM 4
Financial planning
DEFINITION 4
involves analyzing short-term and lon g-term money flows to and
from the company (to optimize profita bility and make best use of
its money) Three key steps of financ ial planning: 1.Forecasting the
firms short-term and long-term financ ial needs 2.Developing
budgets to meet those needs 3.Establishing fin ancial controls to
see if the company is achieving its go als
TERM 5
Short-Term Forecast
DEFINITION 5
Predicts revenues, costs and expenses for a period of one
year or less
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Finance

The function in a business that acquires funds for a firm and manages them within the firm Finance activities include: Preparing budgets Creating cash flow analyses Planning for expenditures TERM 2

Financial Management

DEFINITION 2 The job of managing a firms resources to meet its goals and objectives TERM 3

Financial

Managers

DEFINITION 3 Examine financial data and recommend strategies for improving financial performance Two key responsibilities: Obtain funds Effectively control the use of those funds Other responsibilities: paying bills, overdue collections, staying abreast of tax law, and internal auditing of financials (lots of accounting overlap) TERM 4

Financial planning

DEFINITION 4 involves analyzing short-term and long-term money flows to and from the company (to optimize profitability and make best use of its money) Three key steps of financial planning: 1.Forecasting the firms short-term and long-term financial needs 2.Developing budgets to meet those needs 3.Establishing financial controls to see if the company is achieving its goals TERM 5

Short-Term Forecast

DEFINITION 5 Predicts revenues, costs and expenses for a period of one year or less

Cash-Flow Forecast

Predicts the cash inflows and outflows in future periods, usually months or quarters TERM 7

Long-Term Forecast

DEFINITION 7 Predicts revenues, costs, and expenses for a period longer than one year and sometimes as long as five or ten years TERM 8

Budget

DEFINITION 8 Sets forth managements expectations for revenues and allocates the use of specific resources throughout the firm Budgets depend heavily on the balance sheet, income statement, statement of cash flows and short-term and long- term financial forecasts The budget is the guide for financial operations and expected financial needs TERM 9

Capital Budget

DEFINITION 9 Highlights a firms spending plans for major asset purchases that often require large sums of money TERM 10

Cash Budget

DEFINITION 10 Estimates cash inflows and outflows during a particular period like a month or quarter

Trade

Credit

The practice of buying goods or services now and paying for them later- the most widely used/least expensive/most convenient source of short-term funding Businesses often get terms 2/10 net 30 when receiving trade credit TERM 17

Promissory Note

DEFINITION 17 A written contract agreeing to pay a supplier a specific sum of money at a definite time (used for firms with bad/no credit) TERM 18

Secured Loans

DEFINITION 18 Backed by collateral (e.g., auto loan) TERM 19

Unsecured Loans

DEFINITION 19 Dont require collateral from the borrower (not every firm gets these) TERM 20

Line of

Credit

DEFINITION 20 A given amount of money the bank will provide so long as the funds are available (speeds up the loan process)

Revolving Credit

Agreement

A line of credit thats guaranteed but comes with a fee TERM 22

SETTING LONG-TERM FINANCING OBJECTIVES

DEFINITION 22 Three questions of financial managers in setting long-term financing objectives: 1.What are the organizations long-term goals and objectives? 2.What funds do we need to achieve the firms long-term goals and objectives? 3.What sources of long-term funding (capital) are available, and which will best fit our needs? TERM 23

Term-Loan Agreement

DEFINITION 23 A promissory note that requires the borrower to repay the loan with interest in specified monthly or annual installments TERM 24

Indenture Terms

DEFINITION 24 The terms of agreement in a bond issue TERM 25

Secured Bond

DEFINITION 25 A bond issued with some form of collateral (i.e. real estate)