Chp 13

Cards (60)

  • Budget
    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
  • Capital budget
    A budget that highlights a firm's spending plans for major asset purchases that often require large sums of money
  • Capital expenditures

    Major investments in either tangible long-term assets such as land, buildings, and equipment or intangible assets such as patents, trademarks, and copyrights
  • Cash budget

    A budget that estimates cash inflows and outflows during a particular period like a month or a quarter
  • Cash flow forecast

    Forecast that predicts the cash inflows and outflows in future periods, usually months or quarters
  • Cost of capital

    The rate of return a company must earn in order to meet the demands of its lenders and expectations of its equity holders
  • Debt financing

    Funds raised through various forms of borrowing that must be repaid
  • Equity financing

    Money raised from within the firm, from operations or through the sale of ownership in the firm (stock or venture capital)
  • Factoring
    The process of selling accounts receivable for cash
  • Finance
    The function in a business that acquires funds for the firm and manages those funds within the firm
  • Financial control

    A process in which a firm periodically compares its actual revenues, costs, and expenses with its budget
  • Financial management

    The job of managing a firm's resources so it can meet its goals and objectives
  • Financial managers

    Managers who examine financial data prepared by accountants and recommend strategies for improving the financial performance of the firm
  • Leverage
    Raising needed funds through borrowing to increase a firm's rate of return
  • Line of credit

    A given amount of unsecured short-term funds a bank will lend to a business, provided the funds are readily available
  • Operating (or master) budget

    The budget that ties together the firm's other budgets and summarizes its proposed financial activities
  • Promissory note

    A written agreement with a promise to pay a supplier a specific sum of money at a definite time
  • Risk/return trade-off

    The principle that the greater the risk a lender takes in making a loan, the higher the interest rate required
  • Secured loan

    A loan backed by collateral (something valuable, such as property)
  • Term-loan agreement

    A promissory note that requires the borrower to repay the loan in specified installments
  • Trade credit

    The practice of buying goods and services now and paying for them later
  • Unsecured loan
    A loan that doesn't require any collateral
  • Venture capital

    Money that is invested in new or emerging companies that are perceived as having great profit potential
  • Banker's acceptance
    A promise that the bank will pay some specified amount at a particular time
  • Barter
    The direct trading of goods or services for other goods or services
  • Certificate of deposit (CD)

    A time-deposit (savings) account that earns interest to be delivered at the end of the certificate's maturity date
  • Commercial bank

    A profit-seeking organization that receives deposits from individuals and corporations in the form of checking and savings accounts and then uses some of these funds to make loans
  • Credit unions

    Nonprofit, member-owned financial cooperatives that offer the full variety of banking services to their members
  • Debit card
    An electronic funds transfer tool that serves the same function as checks: it withdraws funds from a checking account
  • Demand deposit
    The technical name for a checking account; the money in a demand deposit can be withdrawn anytime on demand from the depositor
  • Discount rate

    The interest rate that the Fed charges for loans to member banks
  • Electronic funds transfer (EFT) system

    A computerized system that electronically performs financial transactions such as making purchases, paying bills, and receiving paychecks
  • Federal Deposit Insurance Corporation (FDIC)

    An independent agency of the U.S. government that insures bank deposits
  • International Monetary Fund (IMF)

    Organization that assists the smooth flow of money among nations
  • Letter of credit
    A promise by the bank to pay the seller a given amount if certain conditions are met
    1. 1
    Money that can be accessed quickly and easily (coins and paper money, checks, traveler's checks, etc.)
    1. 2
    Money included in M-1 plus money that may take a little more time to obtain (savings accounts, money market accounts, mutual funds, certificates of deposit, etc.)
    1. 3
    2. 2 plus big deposits like institutional money market funds
  • Money
    Anything that people generally accept as payment for goods and services
  • Money supply

    The amount of money the Federal Reserve Bank makes available for people to buy goods and services