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33 Cards in this Set
- Front
- Back
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Budget
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a financial plan that sets forth management’s expectations, and, on the basis of those expectations, allocates the use of specific resources throughout the firm
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Capital Budget
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a budget that highlights a firm’s spending plans for major asset purchases that often require large sums of money
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Capital Expenditures
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major investments in either tangible long-term assets such as land, buildings and equipment or intangible assets such as patents, trademarks, and copyrights
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Cash Budget
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a budget that estimates a firm’s projected cash inflows and outflows that the firm can use to plan for any cash shortages or surpluses during a given period
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Cash Flow Forecast
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forecast that predicts the cash inflows and outflows in future periods, usually months or quarters
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Commercial Finance Companies
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organizations that make short-term loans to borrowers who offer tangible assets as collateral
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Commercial Paper
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unsecured promissory notes of $100,000 and up that mature in 270 days or less
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Cost of Capital
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the rate of return a company must earn in order to meet the demands of its lenders and expectations of its equity holders
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Debt Financing
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funds raised through various forms of borrowing that must be repaid
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Equity Financing
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funds raised from operations within the firm or through the sale of ownership in the firm
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Factoring
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the process of selling accounts receivable for cash
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Finance
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the function in a business that acquires funds for the firm and manages those funds within the firm
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Financial Control
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a process in which a firm periodically compares its actual revenues, costs, and expenses with its projected ones
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Financial Management
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the job of managing a firm’s resources so it can meet its goals and objectives
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Financial Managers
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managers who make recommendations to top executives regarding strategies for improving the financial strength of a firm
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Indenture Terms
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the terms of agreement in a bond issue
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Leverage
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raising needed funds through borrowing to increase a firm’s rate of return
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Line of Credit
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a given amount of unsecured short-term funds a bank will lend to a business, provided the funds are readily available
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Long-term Financing
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borrowed capital that will be repaid over a specific period longer than one year
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Long-term Forecast
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forecast that predicts revenues, costs, and expenses for a period longer than 1 year, and sometimes as far as 5 or 10 years into the futures
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Operating Budget (Master Budget)
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the budget that ties together all of a firm’s other budgets; it is the projection of dollar allocations to various costs and expenses needed to run or operate the business, given projected revenues
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Promissory Note
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a written contract with a promise to pay a supplier a specific sum of money at a definite time
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Revolving Credit Agreement
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a line of credit that is guaranteed by the bank
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Risk/Return Trade Off
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the principle that the greater the risk a lender takes in making a loan, the higher the interest rate required
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Secured Bond
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a bond issued with some form of collateral
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Secured Loan
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a loan backed by something valuable, such as property
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Short-term Financing
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borrowed capital that will be repaid within one-year
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Short-term Forecast
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forecast that predicts revenues, costs, and expenses for a period of one year or less
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Term-loan Agreement
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a promissory note that requires the borrower to repay the loan in specified installments
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Trade Credit
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the practice of buying goods and services now and paying for them later
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Unsecured Bond
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a bond backed only by the reputation of the issuer; also called a debenture bond
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Unsecured Loan
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a loan that’s not backed by any specific assets
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Venture Capital
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money that is invested in new or emerging companies that are perceived as having great profit potential
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