class / CH 19 Managing Financial Resources

financing - aquire funds& manage funds
financing manager - responsible for accounts payable & accounts receivable
3 ways companies fail financially - 1.undercapitalization 2.poor control over cash flow 3.Inadequate expense control
Budget - financial plan - tells each department to use amount of money in given period
3 types of budget - Operating, cash, capital
financial control - try to adjust actual income and expected income
Time value of money - everyone wants to have money sooner than later : get now & pay late
Debt financing - money that must be repayed (eg. loan, bond
Equity financing - equity = ownership (eg. stock, retained earnings, venture capital
leverage - raising funds through borrowing (debt)
cost of capital - the amount of a company needs to earn to pay both loan&investors
From Bank - secured loan (w/ collateral), unsecured loan (only w/ reputation), line of credit (offered by bank)
Commercial finance companies - not bank, higher interest but can take higher risk