SPMA 2P27- Week 3: Budgeting and Debt/Equity Financing

These flashcards cover key vocabulary terms and concepts related to budgeting and financing in sports management, useful for exam preparation.

Budget

A roadmap expressed in monetary terms, highlighting all anticipated assets, debts, expenses, revenues, and net worth of an organization.

Operational Budget

Reflects the day-to-day operations of the organization, listing sales and expenditures for organizational operations.

Capital Budget

Long-term budget focusing on future expenditures relevant to the organization's growth and development.

Pro Forma Budget

A budget based on past financial results and future financial expectations.

Incremental Budgeting

A budgeting approach where an existing budget is increased based on expected changes.

Decremental Budgeting

A budgeting approach where revenue and expenses are decreased based on expected lower revenues.

Break-Even Point

The price and cost point at which expenses are covered by expected revenues.

Fixed Costs

Expenses that do not change with the number of goods or services produced or sold.

Variable Costs

Expenses that change in direct proportion to the volume of goods or services produced.

Debt Financing

Involves borrowing money and paying it back with interest, commonly through bank loans or credit lines.

Equity Financing

Involves selling a portion of a company's equity in return for capital.

Initial Public Offering (IPO)

The process of offering shares of a private corporation to the public in a new stock issuance for the first time.

Angel Investors

Wealthy individuals or groups that provide capital to startups in exchange for equity.

Venture Capitalists

Entities that invest money in startups or companies with growth potential.

Zero Based Budgeting

A budgeting method that requires every unit to justify its expenditures from scratch.

Master Budget

An overall analysis of organizational revenue and expenses; not to be confused with an income statement.

Performance Budgeting

Explores how funds help achieve organizational goals.

Static Budget

Examines fixed costs regardless of changes in revenues.

Line Item Budget

Provides analysis with items listed on individual lines and grouped by relevancy.

Forecasting

A future-based focus on predicting financial outcomes, often uncertain, based on historical data.

Short-Term Planning

Determines how an organization should proceed within a one to two-year timeframe.

Long-Term Planning

Focused on the future, allowing for creativity and consideration of external variables.

Financial Planning

The process of assessing the current financial situation of an organization to identify future financial goals and how to achieve them

Primary Types Of Budget

Operational Budget, Captial Budget

Budgeting Appraoches

Incremental, Decremental

Internal Data

Information sourced from within an organization, including financial reports and operational metrics, used for budgeting and decision-making.

External Data

Data originating outside an organization, used to understand market conditions and external influences (e.g., economic trends, competitor data).

Bank Loan

A type of debt financing where a sum of money is borrowed from a financial institution and repaid with interest over a set period

Line of Credit

A flexible loan from a financial institution that allows a borrower to draw funds up to a certain limit, repaying and redrawing as needed.

Business Credit Card

A credit card issued to a business, used for purchases and expenses, offering a revolving line of credit that must be repaid.