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Role of Financial Managers
Plan, budget, control funds, obtain funds, collect funds, conduct audits, manage taxes, and advise top management on financial matters.
Common Financial Problems
Undercapitalization, poor control over cash flow, and inadequate expense control.
Capital Budget
The spending plan for expensive assets such as property, plant, and equipment.
Cash Budget
Projected cash balance at the end of a given period.
Operating (Master) Budget
The ________ budget summarizes the information in the other two budgets and projects dollar allocations to various costs and expenses given various revenues.
Major Financial Needs of Businesses
______ includes managing day-to-day operations, controlling credit operations, acquiring needed inventory, and making capital expenditures.
Debt Financing
______ financing raises funds by borrowing.
Equity Financing
_____ financing raises funds from within the firm through retained earnings or sale of stock.
Short-term Financing
______ financing raises funds to be repaid in less than a year.
Long-term Financing
_______ financing raises funds to be repaid over a longer period.
Trade Credit
_________ is the least expensive and most convenient form of short-term financing, allowing businesses to buy goods and pay later.
Line of Credit
A _____________ is an agreement by a bank to lend a specified amount of money to the business at any time if the money is available.
Secured Loan vs. Unsecured Loan
________ is backed by assets of value; _________ has no collateral
Factoring
______ is selling accounts receivable at a discounted rate to a factor, not a secured loan.
Commercial Paper
________ is a corporation's unsecured promissory note maturing in 270 days or less.
Sources of Long-term Financing
______-term financing includes debt financing through bonds and long-term loans, and equity financing through stock sales and retained earnings.
Forms of Debt Financing
Forms of _________ comes from selling bonds and borrowing from financial institutions.
Leverage
________ is borrowing funds to invest in expansion, major asset purchases, or research and development.
