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Chapter 9
Financial Management
| Term | Definition |
|---|---|
| Accounts Receivable | Monies owed to an organization for products or services purhcased on credit |
| Bond Indenture | A contract that specifies the terms of the agreement between bond holders and bond issuers |
| Bond | A debt certificate issued by federal, state, local, and foreign governments, utilities, and corporations (both non and for profit) |
| Budget | An internal financial plan to forecast income and expenses over a set period of time |
| Capital Budget | A financial plan for the purhcase and depreciation of an organization's major assets that include property, plant, and equipment |
| Capital Expenditures | Major investments in tangible or intangible long-term assets |
| Cash Budget | A financial plan of the cash inflows of an organization over a period of time to help managers anticipate borrowing needs, operating costs, and a debt repayment plan |
| Commercial Paper | An unsecured promissory note of $100K or more that matures in 270 days or less |
| Credit Sales | Sales that allow goods and services to be received by a purchaser right away and payment to be made by a specified time in the future |
| Debt Financing | Money borrowed from outside the organization (bank/investment firm/ commercial lender) that must be repaid |
| Equity Financing | Money rasied from within the organization from operations or through the sale of ownership |
| Finance | The science of managing money |
| Financial Controls | Policies and procedures put in plan to manage an organization's financial plan and achieve its financial objectives |
| Financial Management | The effective management of money to accomplish organizational objectives |
| Financial Planning | The process of determining an organization's future needs and how to achieve them |
| First-in / First-out Method | An inventory accounting method that uses the first inventory purchased first and results in a lower cost of goods sold and higher net income |
| Forecasting | The process of making predictions about the future based on the past data and current trends |
| Intangible Assets | Investments in patents, trademarks, and copyrights |
| Inventory | The raw materials/ work-on-process/ finished goods that are part of an organization's assets and are or will be offered for sale |
| Last-in/ First-out Method | An inventory accounting method that uses the last inventory purchased first and results in a higher costs of goods sold |
| Line of Credit | An arrangement where an organization is preapproved to receive a fixed amount of funds upon request, but funding is not guaranteed if the bank does not have the money available to lend |
| Long-term Forecast | A forecast that predicts revenues and expenses for a period of more than one year and as long as 10 years |
| Marketable Securities | Low risk securities with durations that range from one day to one year and that can easily be bought and sold on the open market |
| Master Budget | A detailed financial plan for the entire organization that ties together the budgets for individual divisions, departments, and projects to address an organization's goals |
| Retained Earnings | The profits a compnay keeps and reinvests internally in the organization |
| Revolving Credit Agreement | A related type of bank financing to a line of credit that guarantees the availability of funds for a fee |
| Risk/Return Trade-off | A business principle that states that the greater the risk to the lender, the higher the interest rate to the borrower |
| Secured Loan | A type of financing backed by collateral (property / equipment/ inventory) |
| Short-term Forecast | A forecast that predicts revenues and expenses for a period of one year or less |
| Tangible Assets | Investments in land, buildings, plants, equipment, and vehicles |
| Term-loan Agreement | A long-term loan that requires a promissory notes to be signed by the borrower promising to repay the loan principle with interest in monthly installments |
| Time-value of Money | A principe of finance that states that money is worth more today than in the future due to its potential to earn interest |
| Trade Credit | Credit extended by suppliers for the purchase of their products and services |
| Unsecured Loan | A type of financing that is not backed by any collateral |
Created by:
aferrari11
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