Understanding Canadian Business: Mining Financial Management

This set of flashcards covers key concepts related to financial management, including definitions of important terms, roles of financial managers, types of financing, and budgeting processes.

Financial Management

The job of managing a firm’s resources to meet its goals and objectives.

Financial Managers

Professionals who examine financial data prepared by accountants and recommend strategies for improving financial performance.

Operating Budget

The most detailed budget that ties all budgets together and summarizes a business's proposed financial activities.

Capital Budget

A budget that highlights a firm’s plans for major asset purchases.

Cash Budget

A budget that estimates a firm’s projected cash inflows and outflows to plan for cash shortages and surpluses.

Forecasting Financial Need

The process of predicting revenues, costs, and expenses for both short-term and long-term.

Debt Financing

Funds raised by borrowing that must be repaid.

Equity Financing

Funds raised through the sale of ownership in a firm, such as shares, and do not need to be repaid.

Trade Credit

A practice of buying goods or services now and paying later, often with specific terms.

Promissory Note

A written contract that promises to pay a supplier a specific sum at a set date.

Unsecured Loan

A loan not backed by any asset or collateral, making it the most difficult to obtain.

Line of Credit

The amount of unsecured funds a bank will lend to a business, not guaranteed to be available.

Venture Capital

Money invested in new or emerging companies that are perceived to have great profit potential.

Initial Public Offering (IPO)

The first time a corporation offers new stock to the general public.

Retained Earnings

Profits a firm reinvests in the business instead of distributing as dividends.

Leverage

Raising funds through borrowing to increase a firm’s rate of return.

Common Stock

The most basic form of ownership in a company, providing voting rights to shareholders.

Preferred Stock

A type of stock that has priority over common stock when it comes to dividends and asset claims.