Chapter 8 Notes

Chapter 8 Notes - Chapter 8: Assessing a New Ventures...

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I. Financial management deals with: 1. Raising Money 2. Managing a company’s finances so to achieve the highest rate of return. How much cash do we have on hand? Do we have enough cash to meet our short-term obligations? How efficiently are we utilizing our assets? How does our growth and net profits compare to those of our industry peers? Where will the funds we need for capital improvements come from? Are there ways we can partner with other firms to share risk and reduce the amount of cash we need? Overall, are we in good shape financially ? II. Financial Objectives of a Firm: 1. Profitability - the ability to earn a profit. 2. Liquidity - a company’s ability to meet its short-term financial obligations. 3. Efficiency - how productively a firm utilizes its assets relative to its revenue and its profits. 4. Stability - the strength and vigor of the firm’s overall financial position. III.The Financial Management Process to assess whether its financial objectives are being met, firms rely on analysis of financial statements, forecasts, and budgets. - Three Steps involved: 1. Financial statements - a written report that quantitatively describes a firm’s financial health. 2. Ratio analysis - Ongoing analysis of a firm’s financial results/ratios 3. Forecasts - an estimate of a firm’s future income and expenses, based on its past performance, its current circumstances, and its future plans. IV.
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This note was uploaded on 06/12/2011 for the course MNGT 305 taught by Professor Chadwick during the Spring '11 term at Nicholls State.

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Chapter 8 Notes - Chapter 8: Assessing a New Ventures...

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