Sources Of Capital, Working Capital And Cash Flow Management,

Front 1

Equity

Back 1

Are the financial rosources provided by owners of the business, including initial, additional investments and earnings retained in the business.

Front 2

Borrowed capital

Back 2

Are those loans extended by financial intermediaries or investors, in the issuance of credit instruments.

Front 3

Authorized capital stock

Issued stock

Reacquired stocks

Outstanding stock

Back 3

Forms of Capital Stock

Front 4

Authorized capital stock

Back 4

Is the maximum number of shares that the business owners are allowed to issue.

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Issued stock

Back 5

Is the amount of authorized stock subscribed to and paid for in cash, property or services.

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Reacquired stocks

Back 6

These stocks can be reacquired in two ways: (1) is gift from stockholders; (2) is buying back some of the company's issued stock.

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Outstanding stock

Back 7

Is the portion of issued stock nor reacquired.

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Common shares

Back 8

Are units of ownership registered in the names of proprietors.

*has the right to vote or elect bod

*share in profits and dividends

*pre-emptive common law right

*right to assets in liquidation

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Preffered shares issuance

Back 9

Is indicated in the articles of incorporation.

*no right to vote or elect

*right to share in profits and dividends

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Current or short term

Back 10

Debt due to repayment within a period of twelve months

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Non-current or long-term

Back 11

A debt with a maturity term of more than twelve months

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Debt is Secured

Back 12

The creditor has claims against the borrower and against assets of the borrower.

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Unsecured

Back 13

Debt is ________ the lender has a claim against the borrower but no additional claim to any particular property owned by the borrower.

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Marketable debt

Back 14

Takes the form of securities such as notes, bonds or debentures which ate issued to investors and can be traded in a secondary market.

Front 15

Non-marketable debt

Back 15

Takes the form of loans arranged privately between two parties where the lender is usually a bank or other financial intermediary.

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Financial leverage

Back 16

Is the use of borrowed capital.

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Interest

Back 17

Is the cost of borrowed capital

Front 18

Liquidity

Back 18

The most important policy consideration of most businesses considering short-term financing is ________

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Solvency risk factor

Back 19

Another primary risk of short-term financing is default on payment of the principal and the interest called _________

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Solvency risk

Back 20

________ increase as the total volume of short term financing increases.

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Profitability

Back 21

The third factor is _________,which os measured in terms of opportunity cost, and financial expenses such as service charges, interest charges and carrying charges.

Front 22

Trade credit market

Customer loan market

Receivables sales market

Back 22

Major sources of funds

Front 23

Trade credit market

Back 23

Is any place where raw materials or finished inventories may be purchased on credit.

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Customer loan market

Back 24

Is any place where cash funds can be negotiated.

Front 25

Receivables sales market

Back 25

Factoring companies buy outright from manufacturers that their open accounts receivables.

Front 26

Pure discount loans

Interest-only loans

Amortized loans

Back 26

Basic type of loans

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Pure discount loan

Back 27

Is the simplest form of loan. The debtor receives money today and repays a single lump sum at some other time in the future.

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Interest-only loans

Back 28

Allows the debtor to pay interest in each period and to repay the principal at some point in time.

Front 29

Amortized loans

Back 29

Requires the debtor to repay parts of the loan amount over time. The debtor pays the interest for each period plus fixed amount.

Front 30

Working capital

Back 30

Is a portion of the firm's capital continuously converted into cash fund, from its inventories, to accounts receivables and to cash.

Front 31

Inventory replenishment

Back 31

In order to have sufficient stocks to attain the sales goal, and to serve the customer's demand.

Front 32

Provision for operating expenses

Back 32

For day-to-day transactions. This is intended for salaries and wages, interest payments, insurance premiums, taxes and licenses or advertising budget.

Front 33

Back up for credit sales

Back 33

Working capital is a __________ where the firm needs to maintain its operations until receivables are converted into cash.

Front 34

Safety margin

Back 34

For unexpected expenses, possible delays in cash flow, or decline in revenue.

Front 35

Cash management

Back 35

Adheres to the principle that idle cash earns nothing and even if it is deposited in banks, it earns minimal interest.

Front 36

Liquidity management

Back 36

Activities geared towards achieving liquidity objectives of the firm is called __________

Front 37

Financial planning

Back 37

Refers to the process of determining the best uses of financial resources of an organization to attain its predetermined objectives of the procurement of the required funds at the least cost.

Front 38

Financial plan

Back 38

Is thus a statement of what is to be done in the future.

Front 39

Cash plans

Back 39

Can be for a day, week, or month of operation.

Front 40

Cash budget

Back 40

Shows estimated cash receipts and disbursements and the ending cash balance.

Front 41

Cash flow

Back 41

Is the continual movement of money throughout the enterprise during any period of time.

Front 42

Accounts receivables

Back 42

Are money owned to a business from the sale, on credit, of goods or services in the normal course of business.

Front 43

Trade credit

Back 43

Refers to credit sales made to other businesses

Front 44

Consumer credit

Back 44

Refers to a credit sales made to individuals

Front 45

Open account

Back 45

Is an arrangement under which goods or services are sold to a customer on credit, but no formal debt or contract.

Front 46

Delinquent accounts

Back 46

Are those where payments have not been made on due dates

Front 47

Bad debts

Back 47

Are those accounts which have proven to be uncollectible and are written off.

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Credit period

Back 48

Is the period between the date that a buyer is invoiced and the date when payment is due.

Front 49

Discount period

Back 49

Is an expression of the price reduction a buyer will receive if payment is made within the discount period

Front 50

Collection policy

Back 50

The company's effort to collect delinquent accounts either informally or by a debt collection agency is called ____________

Front 51

Break-even point

Back 51

Is the point where the difference between the sales income and the variable expenses equals fixed expenses for the period.

Front 52

Variable expenses

Back 52

Are directly proportional to sales income

Front 53

Fixed expenses

Back 53

Remain constant whatever the sales activity maybe