Day 1
Businesses can look at this budget to see if they have enough cash to pay for their operational requirements. It estimates inflows and outflows of money for a company.
If you organize your business in this way, you and your business are considered to be the same legally. You'll be liable for all business debts.
These corporations are subject to two levels of taxation. The corporation is subject to corporate income tax, and dividends paid to shareholders are also taxed.
These businesses have more than one owner. These owners work out a partnership agreement and are not offered any protection from liabilities.
Enron displayed this issue when high-ranking officers, including the CEO and CFO, used false accounting statements to sell stock at high prices.
Corporate Financial Management
The method a company uses to meet organizational goals with capital. The major goal of this process is the maximization of profits.
Financial Management Processes: Estimation of Capital Requirements
Businesses complete this process when they need to discern their long-term money needs.
The Agency Problem: Possible Solutions
Businesses can try to handle this issue by offering monetary incentives for avoiding it or threatening to fire employees who display it.
A business arrangement that has a general partner who is in control and limited partners who aren't given rights to management.
This type of corporation isn't subject to federal income tax; shareholders are taxed instead. There are a lot of rules for setting up this kind of corporation.
Methods to increase capital. Businesses can self-generate this with their revenue streams, or use debt and equity from external sources of funding.
Limited Liability Company (LLC): Taxes
If you arrange your business in this way, the company itself isn't responsible for taxes. Taxes pass through to individual owners, who are taxed for business profits with their income tax rate.
Financial Management Processes: Investment Strategies
You work on this process when you determine strategies that can help your company invest and earn money.
A way to plan how capital should be used over time. Once this process shows there's no way to continue value growth, a business will pay out dividends and repurchase stocks.
Large businesses that face a lot of regulation. They are guided by a board of directors elected by shareholders who have invested in the business.
A kind of partnership that is often favored by professionals, including doctors. Each partner in this type of business will be subject to limited liability.
Limited Liability Company (LLC): Registration
You will need to register this kind of business with your state government before you can begin operations.
Financial Management Processes: Determination of Capital Structure
A process in financial management that involves finding out how to acquire the money needed by your company. You may decide to use stocks or bonds.
The primary law that has been put in place in every state to govern partnerships.
Limited Liability Company (LLC): Liability
This company provides members with liability protection by keeping personal assets and business assets apart. Liability is limited to the money invested in the business.
A conflict that occurs if the managers in a business focus on their best interests instead of the stockholders' best interests.
Limited Liability Company (LLC)
A business structure that combines characteristics of corporations and partnerships.
People in this position guide a company's financial activities and handle the company's capital and investments. They may issue stock or split stock shares.
Operating cash flow + cash flow that comes from investments + cash flow associated with financing
Look at this to see how much money a company makes after removing the money spent on various capital expenditures.
Balance Sheet Equation / Basic Accounting Equation
An equation that says a company's assets have to equal the owner's equity added to liabilities. If assets exceed these, there has been an error in the calculation.
Generally Accepted Accounting Principles (GAAP)
A set of standards that govern how financial statements, including the balance sheet, are reported.
Costs associated with the purchase of equipment and machinery by a business. This many also involve the purchase of buildings.
Balance Sheet Equation / Basic Accounting Equation: Formula
Assets = liabilities + owner's equity
Operating cash flow - capital expenditures
You complete this process by deducting costs associated with a capital asset that is intangible over some length of time.
Operating Cash Flow (OCF): Formula
Earnings before taxes and interest are removed + amortization + depreciation - taxes
You can look at this to see how well you company can use the core activities of business to generate a positive cash flow.
This is how much money a company acquires over the length of an accounting period.
Businesses have this kind of cash flow when they bring in more cash than they lose.
Use this accounting process by deducting the costs of capital assets that are considered tangible.
These are things a business owes and they must be reported on this financial statement. Examples can include payments for rent or interest.
We use this term to describe what happens if a company's revenue is greater than its expenses in an accounting period.
A financial statement that lists a company's accounts for liabilities, assets and owner's equity. It also shows the balances of these accounts.
Earnings Before Interest and Taxes (EBIT)
The revenue a company has left after they take out costs associated with production, general expenses, administration and selling, but before removing taxes of interest.
This measures multiple cash inflows into a company over a set length of time.
We use this term to refer to things that have value that are owned by a company. Examples can include equipment or land.
A type of cash flow that occurs when a business loses more money than it brings in.
We look at this ratio to judge a company's ability to pay off its short-term debts using assets with the most liquidity.
These accounts always remain on the chart of accounts for a company once they are opened.
Statement of Retained Earnings
We look at this financial statement to see how much of a company's earnings were kept and invested back into the company.
Current Ratio / Working Capital Ratio
A ratio used to see how many current liabilities a company has in comparison to its current assets.
The liquidity ratio that includes the most stringency. It looks only at a company's cash and cash equivalents.
Earnings per Share Ratio: Formula
Net income / weighted average shares of outstanding common stock
Looking at this ratio will show you the amount of assets that a company used debt to finance.
Current Ratio / Working Capital Ratio: Formula
Current assets / current liabilities
We use this term when discussing the rate at which we can transform an asset into cash.
(Cash & Cash Equivalents + Accounts Receivable) / Liabilities
This financial statement lists all company accounts that are separated by category. It doesn't include temporary accounts.
Ratios that use information drawn from financial statements. Businesses can use these when they want to judge how productive and efficient they are.
This shows all of a company's accounts after any financial adjustments have been completed, meaning that it offers a timely and accurate looks at a company's accounts.
Earnings per Share Ratio (EPS)
Complete this ratio to see the amount a company earns in net income for each share of its common stock.
Total liabilities / total assets
These are assets that an organization may convert into cash inside of a single year.
This ratio allows us to judge the return associated with money that shareholders have invested.
Return on Equity Ratio: Formula
Net income / average stockholder's equity
A financial statement that can tell you what amount of money your company lost or earned over a set amount of time.
(Cash + cash equivalents) / current liabilities
This aspect of financial planning focuses on analyzing the financial viability of a business venture. You do this by assessing its total costs and possible profits.
This document is primarily used in financial planning to assess potential revenues and expenses that can occur during a specific length of time.
This rate deals with how much a company can grow in a given amount of time with no money borrowed. Companies exceed this if they borrow funds.
A rate that can be used to ascertain the uppermost amount of growth a company can complete without drawing on external financing.
Companies create this balance sheet when using the percentage of sale method. It will be unbalanced until the company determines how much external financing it needs.
This is a method for financial forecasting that can be used to annually forecast a business's sales growth.
We use this term to refer to the way money moves into a business or out of the business.
Percentage of Retained Earnings: Formula
Retained Earnings / Net Income x 100
Forecasted Sales Growth: Formula
Current Sales x (1 + Growth Rate/100)
External Financing Needed (EFN): Formula
Change in Assets - Change in a Company's Current Liabilities - Company's Retained Earnings
A process in financial planning that involves figuring out where to use the resources available to a company in order to fulfill organizational goals.
A financial statement that records assets, liabilities, and owner's equity.
Internal Growth Rate (IGR): Formula
Retained Earnings / Total Assets
These budgets are used by a business to determine how to pay for a capital investment.
External Financing Needed (EFN)
This tells us how much financing a company needs from outside sources.
These are investments that take a long time to recover their initial costs. Expensive equipment is an example.
Factors that influence whether a company grows or falters. They can include natural resources, employees who are available to work, consumers, and technology.
These are valuable things that are found in nature. They can impact business growth. An example of this would be an increase in the cost to transport goods due to expensive fuel.
A special kind of budget that contains separate but interdependent budgets. Estimates of these budgets may be influenced by one another.
Financial Planning Model: Sales Forecast
A way for businesses to predict the percentage that their sales will grow. This propels the financial planning model forward.
Sources of financing from outside of a company. You may obtain this kind of financing by getting a loan or by selling some of your company's stocks.
Financial Planning Model: Economic Assumptions
An element of the financial planning model that focuses on external factors, such as weather, along with the economy and market sector.
Financial Planning Model: Pro Forma Financial Statement
You can create this statement, which may forecast future financial statements, as part of the financial planning model.
Systems set up by a business for controlling acquisitions and making sure the use of financial resources follows a plan.
A model that executives can use to assess how business strategies may effect their organizations in the future.
Financial Planning Model: Plug
This financial planning model element is a backup measure that a company can use to handle potential gaps in the plan.
Day 1
Businesses can look at this budget to see if they have enough cash to pay for their operational requirements. It estimates inflows and outflows of money for a company.
If you organize your business in this way, you and your business are considered to be the same legally. You'll be liable for all business debts.
These corporations are subject to two levels of taxation. The corporation is subject to corporate income tax, and dividends paid to shareholders are also taxed.
These businesses have more than one owner. These owners work out a partnership agreement and are not offered any protection from liabilities.
Enron displayed this issue when high-ranking officers, including the CEO and CFO, used false accounting statements to sell stock at high prices.
Corporate Financial Management
The method a company uses to meet organizational goals with capital. The major goal of this process is the maximization of profits.
Financial Management Processes: Estimation of Capital Requirements
Businesses complete this process when they need to discern their long-term money needs.
The Agency Problem: Possible Solutions
Businesses can try to handle this issue by offering monetary incentives for avoiding it or threatening to fire employees who display it.
A business arrangement that has a general partner who is in control and limited partners who aren't given rights to management.
This type of corporation isn't subject to federal income tax; shareholders are taxed instead. There are a lot of rules for setting up this kind of corporation.
Methods to increase capital. Businesses can self-generate this with their revenue streams, or use debt and equity from external sources of funding.
Limited Liability Company (LLC): Taxes
If you arrange your business in this way, the company itself isn't responsible for taxes. Taxes pass through to individual owners, who are taxed for business profits with their income tax rate.
Financial Management Processes: Investment Strategies
You work on this process when you determine strategies that can help your company invest and earn money.
A way to plan how capital should be used over time. Once this process shows there's no way to continue value growth, a business will pay out dividends and repurchase stocks.
Large businesses that face a lot of regulation. They are guided by a board of directors elected by shareholders who have invested in the business.
A kind of partnership that is often favored by professionals, including doctors. Each partner in this type of business will be subject to limited liability.
Limited Liability Company (LLC): Registration
You will need to register this kind of business with your state government before you can begin operations.
Financial Management Processes: Determination of Capital Structure
A process in financial management that involves finding out how to acquire the money needed by your company. You may decide to use stocks or bonds.
The primary law that has been put in place in every state to govern partnerships.
Limited Liability Company (LLC): Liability
This company provides members with liability protection by keeping personal assets and business assets apart. Liability is limited to the money invested in the business.
A conflict that occurs if the managers in a business focus on their best interests instead of the stockholders' best interests.
Limited Liability Company (LLC)
A business structure that combines characteristics of corporations and partnerships.
People in this position guide a company's financial activities and handle the company's capital and investments. They may issue stock or split stock shares.
Operating cash flow + cash flow that comes from investments + cash flow associated with financing
Look at this to see how much money a company makes after removing the money spent on various capital expenditures.
Balance Sheet Equation / Basic Accounting Equation
An equation that says a company's assets have to equal the owner's equity added to liabilities. If assets exceed these, there has been an error in the calculation.
Generally Accepted Accounting Principles (GAAP)
A set of standards that govern how financial statements, including the balance sheet, are reported.
Costs associated with the purchase of equipment and machinery by a business. This many also involve the purchase of buildings.
Balance Sheet Equation / Basic Accounting Equation: Formula
Assets = liabilities + owner's equity
Operating cash flow - capital expenditures
You complete this process by deducting costs associated with a capital asset that is intangible over some length of time.
Operating Cash Flow (OCF): Formula
Earnings before taxes and interest are removed + amortization + depreciation - taxes
You can look at this to see how well you company can use the core activities of business to generate a positive cash flow.
This is how much money a company acquires over the length of an accounting period.
Businesses have this kind of cash flow when they bring in more cash than they lose.
Use this accounting process by deducting the costs of capital assets that are considered tangible.
These are things a business owes and they must be reported on this financial statement. Examples can include payments for rent or interest.
We use this term to describe what happens if a company's revenue is greater than its expenses in an accounting period.
A financial statement that lists a company's accounts for liabilities, assets and owner's equity. It also shows the balances of these accounts.
Earnings Before Interest and Taxes (EBIT)
The revenue a company has left after they take out costs associated with production, general expenses, administration and selling, but before removing taxes of interest.
This measures multiple cash inflows into a company over a set length of time.
We use this term to refer to things that have value that are owned by a company. Examples can include equipment or land.
A type of cash flow that occurs when a business loses more money than it brings in.
We look at this ratio to judge a company's ability to pay off its short-term debts using assets with the most liquidity.
These accounts always remain on the chart of accounts for a company once they are opened.
Statement of Retained Earnings
We look at this financial statement to see how much of a company's earnings were kept and invested back into the company.
Current Ratio / Working Capital Ratio
A ratio used to see how many current liabilities a company has in comparison to its current assets.
The liquidity ratio that includes the most stringency. It looks only at a company's cash and cash equivalents.
Earnings per Share Ratio: Formula
Net income / weighted average shares of outstanding common stock
Looking at this ratio will show you the amount of assets that a company used debt to finance.
Current Ratio / Working Capital Ratio: Formula
Current assets / current liabilities
We use this term when discussing the rate at which we can transform an asset into cash.
(Cash & Cash Equivalents + Accounts Receivable) / Liabilities
This financial statement lists all company accounts that are separated by category. It doesn't include temporary accounts.
Ratios that use information drawn from financial statements. Businesses can use these when they want to judge how productive and efficient they are.
This shows all of a company's accounts after any financial adjustments have been completed, meaning that it offers a timely and accurate looks at a company's accounts.
Earnings per Share Ratio (EPS)
Complete this ratio to see the amount a company earns in net income for each share of its common stock.
Total liabilities / total assets
These are assets that an organization may convert into cash inside of a single year.
This ratio allows us to judge the return associated with money that shareholders have invested.
Return on Equity Ratio: Formula
Net income / average stockholder's equity
A financial statement that can tell you what amount of money your company lost or earned over a set amount of time.
(Cash + cash equivalents) / current liabilities
This aspect of financial planning focuses on analyzing the financial viability of a business venture. You do this by assessing its total costs and possible profits.
This document is primarily used in financial planning to assess potential revenues and expenses that can occur during a specific length of time.
This rate deals with how much a company can grow in a given amount of time with no money borrowed. Companies exceed this if they borrow funds.
A rate that can be used to ascertain the uppermost amount of growth a company can complete without drawing on external financing.
Companies create this balance sheet when using the percentage of sale method. It will be unbalanced until the company determines how much external financing it needs.
This is a method for financial forecasting that can be used to annually forecast a business's sales growth.
We use this term to refer to the way money moves into a business or out of the business.
Percentage of Retained Earnings: Formula
Retained Earnings / Net Income x 100
Forecasted Sales Growth: Formula
Current Sales x (1 + Growth Rate/100)
External Financing Needed (EFN): Formula
Change in Assets - Change in a Company's Current Liabilities - Company's Retained Earnings
A process in financial planning that involves figuring out where to use the resources available to a company in order to fulfill organizational goals.
A financial statement that records assets, liabilities, and owner's equity.
Internal Growth Rate (IGR): Formula
Retained Earnings / Total Assets
These budgets are used by a business to determine how to pay for a capital investment.
External Financing Needed (EFN)
This tells us how much financing a company needs from outside sources.
These are investments that take a long time to recover their initial costs. Expensive equipment is an example.
Factors that influence whether a company grows or falters. They can include natural resources, employees who are available to work, consumers, and technology.
These are valuable things that are found in nature. They can impact business growth. An example of this would be an increase in the cost to transport goods due to expensive fuel.
A special kind of budget that contains separate but interdependent budgets. Estimates of these budgets may be influenced by one another.
Financial Planning Model: Sales Forecast
A way for businesses to predict the percentage that their sales will grow. This propels the financial planning model forward.
Sources of financing from outside of a company. You may obtain this kind of financing by getting a loan or by selling some of your company's stocks.
Financial Planning Model: Economic Assumptions
An element of the financial planning model that focuses on external factors, such as weather, along with the economy and market sector.
Financial Planning Model: Pro Forma Financial Statement
You can create this statement, which may forecast future financial statements, as part of the financial planning model.
Systems set up by a business for controlling acquisitions and making sure the use of financial resources follows a plan.
A model that executives can use to assess how business strategies may effect their organizations in the future.
Financial Planning Model: Plug
This financial planning model element is a backup measure that a company can use to handle potential gaps in the plan.
