Chapter 18

Front 1

Finance

Back 1

the function of a business that aquires funds for the fim and manages funds within the firm

Front 2

financial managment

Back 2

managing a firms resources so it can meet its goals and objectives

Front 3

financial managers

Back 3

managers who examine financial data prepared by accountants and reccoment strategies for improving finanvcial performance

Front 4

short term forcast

Back 4

forcast the predicts revenue cost and expenses for a period of one year or less

Front 5

cash-flow focast

Back 5

forcast the predicts the cash inflows in future periods usually months or quarters.

Front 6

long term forcast

Back 6

forcast the predicts revenue cost and expenses for a period longer than 1 year

Front 7

budget

Back 7

manages the resources the use throughout the firm

Front 8

capital budget

Back 8

highlights the firms spending plans for major assets the require large sums of money

Front 9

cash budget

Back 9

a budget that estimates cash inflows and outflows during a particular period of time

Front 10

operating budget

Back 10

budget that ties togeather the firms other budgets and summarizes its proposed financial activities

Front 11

financial control

Back 11

a process in which a firm periodically compares its actual revenues, costs and expenses with its budgets.

Front 12

capital expenditures

Back 12

major invesments in either tangibl long term assets such as land buildings equipment and intangable assets.

Front 13

debt financing

Back 13

funds raised through various forms of borrowing that must be repaid

Front 14

equity financing

Back 14

money raised from within the firm form operations or through sale of ownership

Front 15

short- term financing

Back 15

funds needed for a year or less

Front 16

long term financing

Back 16

funds needed for more than a year

Front 17

tarde credit

Back 17

buying goods and services now and paying for them later

Front 18

promissory note

Back 18

a written contract with a promise to pay a supplier a specific sum of money at a definite time

Front 19

securd loan

Back 19

a loan backed by collateral

Front 20

unsecured loan

Back 20

a loan that doesnt require any collateral

Front 21

line of credit

Back 21

a giving ammount of shot term funds a bank will lend to a business

Front 22

revolving credit agreement

Back 22

a line of credit thats guarenteed but usually comes with a fee

Front 23

commecial finance companies

Back 23

organizations that make short term loans to borrowers who offer tangible assets as colateral

Front 24

factoring

Back 24

selling accounts recieveable for cash

Front 25

commercial paper

Back 25

unsecured promissory notes of 100,000 and up

Front 26

tern loan agreement

Back 26

Promissory note that requires the borrower bto repay the loan in specific installments

Front 27

risk/return tradeoffs

Back 27

principle that the greater the risk the lender takes in making the loan the higher the intrest rate required

Front 28

indenture terms

Back 28

terms of agreement in a bond issue

Front 29

serured bond

Back 29

bond issues with some form of collateral

Front 30

unsecured bond

Back 30

bond backed by only the reputation of the issuer

Front 31

venture capital

Back 31

money invested in new and emerging companies

Front 32

leverage

Back 32

raising needed funds through borrowing to increase a frims rate of return

Front 33

cost of capital

Back 33

the rate of return a company must earn in order to meet the demands of its lenders and expectaions of its equity holders