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Responsible for planning and overseeing the financial resources of a firm
The business function involving decisions about firm's long-term investments and obtaining the funds to pay for those investments
Cash Flow Management
Managing the pattern in which cash flows into the firm in the form of revenue and out of the firm in the form of debt payments.
The process of checking actual performance against plans to ensure that the desired financial status is achieved.
A description of how a business will reach some financial position it seeks for the future.
Short Term (Operating) Expenditures
- Account Payable
- Account Receivable
Stages of Inventory
- Raw material Inventory
- Work in Process
- Finished goods inventory
Rules governing a firm's extension of credit to customer
Materials and goods currently held by the company that will be sold within a year.
Sources of Short-Term Funds
- Trade Credit
- Secured Short-Term Loan
- Unsecured Short-Term Loan
The granting of credit by a selling firm to a buying firm
Open book Credit
Form of trade credit in which sellers ship merchandise on faith that payment will be forthcoming.
Form of trade credit in which buyers sign promise to pay agreements before merchandise is shipped.
Form of trade credit in which buyers must sign statements of payment terms attached to merchandise by sellers.
A short-term loan in which the borrower is required to put up collateral.
Short-term loan in which
The short-term loan in which the borrower is not required to put up collateral.
A method od short-run fund-raising in which a firm sells unsecured notes for less than the face value and then repurchases them at the face value within 270 days.
Line of Credit
A standing agreement between a bank and a firm.
Raising $ to meet long-term expeditures by borrowing from the outside of the company.
A promise by the issuing company to pay the holder a certain amount of money on a specified date
Raising $ to meet long-term expenditures by issuing common shares or by retaining earning.
Hybrid Financing: Preferred Stock
- Required fixed payments as do bonds
- unlike bonds they dont have a maturity date
- shareholders receive a dividend if the firm can afford it.
- preferred shareholders get paid first
No voting rights
External equity funding provided in return for part ownership in the borrowing firm.
Risk Management Process
- Identify Risks
- Measure impact on firm
- Evaluate Alternatives
- Implement Program
- Monitor Results
uncertaintly about future events
The chance for gain or loss
only chance of loss (fire in the warehouse)
Refusing to participate in risky ventures
Techniques to prevent losses or minimize their impact
covering a firm's unavoidable losses with its own funds
transferring risk to another firm, individual , often by contract.
Relative mix of a firm's dept and equity financing
Shwos the amount of risk and the likely rate of return on various financial instruments