Business Finance & Financial Management Basics

Vocabulary flashcards covering key terms and definitions from the lecture on business finance and financial management.

Finance

The science and art of managing money, involving orderly procedures and creative decision-making to raise and use funds.

Financial Management

The analysis and use of money to make business decisions aimed at maximizing profit, managing cash flow, creating scenarios, and ensuring regulatory compliance.

Personal Finance

Management of an individual’s money, savings, and investments, including budgeting, banking, insurance, taxes, and retirement planning.

Corporate Finance

Area focused on how businesses fund operations, choose capital structure, and make investment decisions to increase profitability and shareholder value.

Public Finance

Management of government revenue, expenditure, and debt, including taxation and the provision of public goods and services.

Sole Proprietorship

A business owned and managed by one person who bears unlimited liability for assets and debts.

Partnership

A business with two or more owners sharing profits and liabilities; not a separate legal entity except in limited partnerships.

Corporation

A legal entity separate from its owners (shareholders), offering limited liability and governed by corporate laws.

Privately Owned Corporation

A corporation whose shares are held by a few individuals (often family) and are not traded on public stock exchanges.

Publicly Owned Corporation

A corporation that sells shares to the general public via stock markets and must disclose financial reports.

Stock Corporation

A for-profit corporation that issues shares and may distribute dividends to stockholders; registered with the SEC as such.

Non-stock Corporation

A non-profit organization with members instead of shareholders, pursuing charitable or educational purposes and registered with the SEC.

Financial Manager

Professional who prepares financial reports, directs investments, and conducts long-term financial planning for organizations.

Financing Decision

Choice of how to raise funds for long-term investments, balancing debt, equity, and other capital sources.

Operating Decision

Day-to-day choices affecting a firm’s ongoing activities and cash flow management.

Investing Decision

Determination of which assets or projects a firm should invest in to achieve strategic goals.

Dividend Policy

Guidelines a corporation follows to determine the portion of earnings distributed to shareholders as dividends.

Board of Directors

Group elected by shareholders to oversee corporate governance and make major policy decisions.

CEO / President

Top executive responsible for overall corporate management and implementation of board directives.

VP for Finance

Senior officer overseeing financial planning, budgeting, and capital structure decisions within a corporation.

Capital Structure

The mix of debt and equity a firm uses to finance its operations and growth.

Securities and Exchange Commission (SEC) Registration

Legal requirement for corporations to register with the SEC, ensuring compliance with reporting and regulatory standards.