Finance and Financial Management: Terms and Concepts, Quizzes of Business Research Methods for Managers

Download Finance and Financial Management: Terms and Concepts and more Quizzes Business Research Methods for Managers in PDF only on Docsity! TERM 1 Finance DEFINITION 1 The function in a business that acquires funds for a firm and manages them within the firm Finance activities include: Preparing budgets Creating cash flow analyses Planning for expenditures TERM 2 Financial Management DEFINITION 2 The job of managing a firms resources to meet its goals and objectives TERM 3 Financial Managers DEFINITION 3 Examine financial data and recommend strategies for improving financial performance Two key responsibilities: Obtain funds Effectively control the use of those funds Other responsibilities: paying bills, overdue collections, staying abreast of tax law, and internal auditing of financials (lots of accounting overlap) TERM 4 Financial planning DEFINITION 4 involves analyzing short-term and long-term money flows to and from the company (to optimize profitability and make best use of its money) Three key steps of financial planning: 1.Forecasting the firms short-term and long-term financial needs 2.Developing budgets to meet those needs 3.Establishing financial controls to see if the company is achieving its goals TERM 5 Short-Term Forecast DEFINITION 5 Predicts revenues, costs and expenses for a period of one year or less TERM 6 Cash-Flow Forecast DEFINITION 6 Predicts the cash inflows and outflows in future periods, usually months or quarters TERM 7 Long-Term Forecast DEFINITION 7 Predicts revenues, costs, and expenses for a period longer than one year and sometimes as long as five or ten years TERM 8 Budget DEFINITION 8 Sets forth managements expectations for revenues and allocates the use of specific resources throughout the firm Budgets depend heavily on the balance sheet, income statement, statement of cash flows and short-term and long- term financial forecasts The budget is the guide for financial operations and expected financial needs TERM 9 Capital Budget DEFINITION 9 Highlights a firms spending plans for major asset purchases that often require large sums of money TERM 10 Cash Budget DEFINITION 10 Estimates cash inflows and outflows during a particular period like a month or quarter TERM 21 Revolving Credit Agreement DEFINITION 21 A line of credit thats guaranteed but comes with a fee TERM 22 SETTING LONG-TERM ​FINANCING OBJECTIVES DEFINITION 22 Three questions of financial managers in setting long-term financing objectives: 1.What are the organizations long-term goals and objectives? 2.What funds do we need to achieve the firms long-term goals and objectives? 3.What sources of long-term funding (capital) are available, and which will best fit our needs? TERM 23 Term-Loan Agreement DEFINITION 23 A promissory note that requires the borrower to repay the loan with interest in specified monthly or annual installments TERM 24 Indenture Terms DEFINITION 24 The terms of agreement in a bond issue TERM 25 Secured Bond DEFINITION 25 A bond issued with some form of collateral (i.e. real estate) TERM 26 Unsecured (Debenture) Bond DEFINITION 26 A bond backed only by the reputation of the issuing company TERM 27 SECURING EQUITY FINANCING DEFINITION 27 A company can secure equity financing by: Selling shares of stock in the company Earning profits and using the retained earnings as reinvestments in the firm Attracting Venture Capital TERM 28 Attracting Venture Capital DEFINITION 28 Money that is invested in new or emerging companies that some investors believe have great profit potential TERM 29 Leverage DEFINITION 29 Raising funds through borrowing to increase the firms rate of return TERM 30 Cost of Capital DEFINITION 30 The rate of return a company must earn in order to meet the demands of its lenders and expectations of equity holders