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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 (come due) 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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Money raised from within the firm, or from operations through the sale of ownership in the firm (stock).
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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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management
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The process used to accomplish organizational goals through planning, organizing, leading, and controlling people and other organizational resources.
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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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Funds needed for more than a year (usually 2 to 10 years).
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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 future.
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operating or 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 but usually comes with a fee.
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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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Funds needed for a year or less
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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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