BUAD110Chpt11 - Chapter11 Finance 1 Undercapitalization 2 3...

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Chapter 11 Finance  Firm needs financial management to survive  Most common reasons a firm fails financially: 1. Undercapitalization  2. Poor control over cash flow 3. Inadequate expense control  Financial planning 1. forecasting the firm s short-term and long-term financial needs  2. developing budgets to meet those needs 3. establishing financial controls to see whether the company is achieving its goals  Budgetting  Capital budget: highlights a firm s spending plan for major asset purchases that require large  sums of money Cash budget: estimates cash inflows and outflows during a particular period  Operating budget: ties together the firms s other budgets and summarizes its proposed financial statements  Financial control: process where a firm periodically compares its actual revenues, costs, and ex- penses with its budget  Money has a  time value
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  • Fall '07
  • KYDD
  • Finance, Management, efficient cash management, short­term funds, estimates cash inflows, needs financial management, unsecured short­term funds

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