Business Final- Finance

Financial Control

A process in which a firm periodically compares its actual revenue, costs, and expenses with its budget

Operating (Master) Budget

Capital budget and Cash budget

Financial Managers

Examine financial data prepared by accountants and recommend strategies to improve company financial performance

Long-Term Forecasting

Forecast that predicts revenues, costs, and expenses for a period of time longer than a year

Finance

Function in a business that acquire funds for the firm and manages them within the firm

Financial Management

Job of managing a firm's resources in order to meet company goals and objectives

Poor Control Over Cash Flow

Not controlling and/or not understanding the timing of cash in-flows vs. cash out-flows

Inadequate Expense Control

Not controlling funds vs. a budget

Undercapitalization

Not enough cash to start the company

Short-Term Forecasting

Planned revenues and expenses for a period of oner year or less

Budget

Sets forth management expectations for revenues, and based on those expectations, allocates resources

Equity Financing

The funds raised from within the firm from operations or through sale of ownership in the firm (stock)

Debt Financing

The funds raised through various forms of borrowing that must be repaid

Commercial bank (loan), vendor (trade credit), commercial finance company (collateral secured loan)

What are some forms of short term financing?

Undercapitalization, Poor control over cash flow, and Inadequate Expense Control

What are the three most common reason companies fail financially?