Unit II Study Sheet(족보)

Unit II Study Sheet(족보) - Unit II Study Sheet 1....

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Unit II Study Sheet 1. Know what Finance and Financial Management are. Finance: The function in a business that acquires funds for the firm and manages those funds within the firm. Financial Management: The job of managing a firm’s resources so it can meet its goals and objectives. 2. Know what the 3 most common ways that businesses fail financially are. Undercapitalization (lacking enough funds to start the business). Poor control over cash flow. Inadequate expense control. 3. What are the 3 steps involved in financial planning? Forecasting both short-term and long-term financial needs. Developing budgets to meet those needs Establishing financial control to see how well the company is doing what it set out to do Understand the key operational funding needs of businesses. 1. Managing day-by-day needs of the business. 2. Controlling credit operations 3. Acquiring needed inventory. 4. Making capital expenditures. 5. Know the difference between a secured loan and an unsecured loan. A secured loan is backed by something valuable, such as property. An unsecured loan is not backed by any specific assets. 6. Know about debt financing. Debt financing involves borrowing money that the company has a legal obligation to repay. (debt financing by borrowing money from lending institutions, or by issuing bonds) 7. Know about equity financing. Equity financing by selling stock, from retained earnings, or from venture capital. * Debt financing refers to funds raised by borrowing (going into debt); whereas equity financing is raised from within the firm (through retained earnings or by selling ownership in the company by issuing stock or selling ownership to venture capitalists. ________________________________________________________________________ 1. What are the "securities markets"? Financial marketplaces for stocks and bonds. They have two functions: they assist businesses in finding long-term funding to finance capital needs an provide private investors a place to buy and sell securities such as stocks, bonds, and mutual funds. 2.
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This note was uploaded on 10/24/2011 for the course BUS 264 taught by Professor D during the Spring '11 term at Parkland.

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Unit II Study Sheet(족보) - Unit II Study Sheet 1....

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