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Study sets matching "chapter 10 financial management"

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Study sets matching "chapter 10 financial management"

18 terms
Chapter 10 Financial Management
Accounting rate of return (ARR)
Capital budgeting
Capital rationing
Contingent projects
A rate of return on a capital project based on average net in…
The process of choosing the real assets in which the firm wil…
A situation where a firm does not have enough capital to inve…
Projects whose acceptance depends on the acceptance of anothe…
Accounting rate of return (ARR)
A rate of return on a capital project based on average net in…
Capital budgeting
The process of choosing the real assets in which the firm wil…
22 terms
Financial management chapter 10
1. emergencies... 2.vacations... 3.social ev…
1.home ownership... 2.education... 3.retirem…
1. the amount of your discretionary in…
discretionary income
short term needs
long term needs
factors of the amount of money you will save
what you have left over after you have paid your bills
1. emergencies... 2.vacations... 3.social ev…
short term needs
1.home ownership... 2.education... 3.retirem…
long term needs
50 terms
Chapter 10 Financial Management
The valuation of a financial asset is…
The prices of financial assets are bas…
The market-determined required rate of…
The discount rate depends on the marke…
T
F
T
T
The valuation of a financial asset is…
T
The prices of financial assets are bas…
F
22 terms
Financial Management Chapter 10
Capital Budgeting
Regular Payback Period
Discounted Payback Period
Independent Projects
The process in which a business determines whether projects s…
The length of time required to recover the cost of an investm…
Used to determine the profitability of a project and gives th…
Projects for which their cash flows are not affected by other…
Capital Budgeting
The process in which a business determines whether projects s…
Regular Payback Period
The length of time required to recover the cost of an investm…
16 terms
Financial Management Chapter 10 Vocab
personal financial planning
goals
estimate
values
arranging to spend, save and invest money to live comfortably
things you want to accomplish
make an approximate calculation
the beliefs and principles you consider important
personal financial planning
arranging to spend, save and invest money to live comfortably
goals
things you want to accomplish
28 terms
Chapter 10 financial management
Diversification
financial managers
chief financial officer CFO or vice pr…
CFO also
moderating risk. Not putting all investments into one company…
people working within an organization that acquire financial…
Controllers and treasurers report to CFO... CFO reports directly…
forecast what he financial needs of the firm are going to be…
Diversification
moderating risk. Not putting all investments into one company…
financial managers
people working within an organization that acquire financial…
17 terms
Chapter 10 Financial Management
Personal Financial Planning
Goals
Values
Liquidity
arranging to spend, save, and invest money to live comfortabl…
Things you want to accomplish.
The beliefs and principles you consider important, correct, a…
The ability to easily convert financial assets into cash with…
Personal Financial Planning
arranging to spend, save, and invest money to live comfortabl…
Goals
Things you want to accomplish.
31 terms
Chapter 10 Financial Management
Property Insurance
Liability Insurance
Risk
Speculative risk
Protects you from financial losses resulting from damage to o…
Protects you from financial losses suffered when you are held…
The uncertainty about the outcome of a situation or event, no…
Involves situations where there is the potential for gain as…
Property Insurance
Protects you from financial losses resulting from damage to o…
Liability Insurance
Protects you from financial losses suffered when you are held…
39 terms
Chapter 10: Financial Management
Investments
Risk-Return trade off
Time value of money
Cash Flow not profits
This area of finance encompasses careers related to the secur…
Individuals prefer more certain financial earnings than less…
Individuals usually prefer to have good things sooner and pre…
Financial managers recognize that "Cash pays the bills,
Investments
This area of finance encompasses careers related to the secur…
Risk-Return trade off
Individuals prefer more certain financial earnings than less…
16 terms
Chapter 10 Financial Management
Financial Planning Progress
Debt Financing Sources (5)
Equity Financing Sources
Factoring Account Receivable
Forcecasts - Budgets - Controls
Secured loans... Unsecured loans... Factoring accounts receivable…
Retained Earnings ... Issuing Stock... Venture Capital
Financial transaction and a type of debtor finance in which a…
Financial Planning Progress
Forcecasts - Budgets - Controls
Debt Financing Sources (5)
Secured loans... Unsecured loans... Factoring accounts receivable…
18 terms
Financial Management Chapter 10
capital budgeting
capital expenditure
operating expenditure
capital budgeting process
The process of evaluating and selecting long-term investments…
An outlay of funds by the firm that is expected to produce be…
An outlay of funds by the firm resulting in benefits received…
Five distinct but interrelated steps: proposal generation, re…
capital budgeting
The process of evaluating and selecting long-term investments…
capital expenditure
An outlay of funds by the firm that is expected to produce be…
7 terms
Chapter 10 Financial management
Target capital structure
capital components
before-tax cost of debt, rd
after-tax cost of debt, rd(1 -T )
The mix of debt, preferred stock, and common equity the firm…
One of the types of capital used by firms to raise funds. i.e…
The interest rate the firm must pay on new debt..
The relevant cost of new debt, taking into account the tax de…
Target capital structure
The mix of debt, preferred stock, and common equity the firm…
capital components
One of the types of capital used by firms to raise funds. i.e…
15 terms
chapter 10- financial management
collateral
commercial finance companies
factoring
commercial money
assets sacrificed if the borrower does no repay one fo these…
-lenders that specialize in making secure short- term loans t…
selling accounts receivables ot a specialized lender(at a dis…
-short-term , unsecured promissory notes that are issued in d…
collateral
assets sacrificed if the borrower does no repay one fo these…
commercial finance companies
-lenders that specialize in making secure short- term loans t…
29 terms
Chapter 10:Financial Management
Risk-Return Trade Off
Time Value of Money
Cash Flow not profits
Valuation of assets
The riskier the decision, the higher the return
Money decreases with time
"cash pays bills, not profits"
ability to generate positive cash flow over time
Risk-Return Trade Off
The riskier the decision, the higher the return
Time Value of Money
Money decreases with time
9 terms
Financial Management Chapter 10
Enterprise Value
FCF
WACC
Terminal Value
Market Cap- Cash + debt + minority Interest + Preferred Stock
EBIT(1-Tax Rate) + D/A - increase in working capital- Cap exp…
Weighted Average Cost of Capital
FCF (1+g) / (r-g)
Enterprise Value
Market Cap- Cash + debt + minority Interest + Preferred Stock
FCF
EBIT(1-Tax Rate) + D/A - increase in working capital- Cap exp…
20 terms
Financial Management Chapter 10
credit union
certificate of deposit (CD)
automatic deduction
loan consolidation
not for profit organizations established by groups of people,…
a time deposit where a fixed rate of interest is earned for a…
represent money you have authorized your bank or other organi…
combining many loans into one large loan with one monthly pay…
credit union
not for profit organizations established by groups of people,…
certificate of deposit (CD)
a time deposit where a fixed rate of interest is earned for a…
76 terms
Chapter 10: Financial Management
The job of a procurement officer is to…
If a borrower only pays back the princ…
is NOT a characteristic associated wit…
If a CFO notices that the value of his…
False
True
High-risk borrowers
the firm's net cash flow is decreasing
The job of a procurement officer is to…
False
If a borrower only pays back the princ…
True
33 terms
Financial Management Chapter 10
When calculating WACC, what capital is…
When calculating a company's WACC, sho…
Why might the weights of capital be di…
Identify the firm's three major capita…
...
...
...
...
When calculating WACC, what capital is…
...
When calculating a company's WACC, sho…
...
37 terms
Chapter 10 - Financial Management
Risk-return trade-off
Time value of money
Valuation of assets
Diversification
the riskier the decision, the higher possible return
money is worth more the sooner it is received - premiums are…
ability to generate positive cash flow over time
spreading your funds across a variety of investment opportuni…
Risk-return trade-off
the riskier the decision, the higher possible return
Time value of money
money is worth more the sooner it is received - premiums are…
29 terms
International financial management chapter 10
Exchange rates are extremely
The dollar value of an MNC's future pa…
Exchange rate risk is irrelevant becau…
If us based MNC is well diversified ac…
Volatile
Change substantially in response to exchange rate movements
Investor hedge argument
Currency diversification argument
Exchange rates are extremely
Volatile
The dollar value of an MNC's future pa…
Change substantially in response to exchange rate movements
17 terms
Financial Management Chapter 10 Vocab
Personal Financial Planning
Goals
Values
Liquidity
Arranging to spend, save and invest money to live comfortably…
Things you want to accomplish
The beliefs and principles you consider important.
`The ability to easily convert financial assets into cash wit…
Personal Financial Planning
Arranging to spend, save and invest money to live comfortably…
Goals
Things you want to accomplish
Financial management chapter 10 vocabulary
personal financial planing
goals
values
liquidity
arranging to spent, save, and invest money to live comfortabl…
the things you want to accomplish.
the beliefs and principles you consider important, correct, a…
the availability to easily convert financial assets into cash…
personal financial planing
arranging to spent, save, and invest money to live comfortabl…
goals
the things you want to accomplish.
20 terms
Chapter 10 Vocab-Financial Management
Personal Financial Planning
Goals
Values
Liquidity
Arranging to spend, save, and invest money to live comfortabl…
Things you want to accomplish.
Beliefs and principles you consider important, correct, and d…
The ability to easily convert financial assets into cash with…
Personal Financial Planning
Arranging to spend, save, and invest money to live comfortabl…
Goals
Things you want to accomplish.
13 terms
Chapter 10 vocab financial management
Personal finacial planning
Goals
Values
Liquidy
Arranging so spend, save and invest in money to live comforta…
Are the things you want to accomplish
Are the beliefs and principal you consider important
Is the ability to easily convert financial assets into cash w…
Personal finacial planning
Arranging so spend, save and invest in money to live comforta…
Goals
Are the things you want to accomplish
17 terms
Chapter 10 Vocabulary (FINANCIAL MANAGEMENT)
Personal Financial planning
Goals
Values
Liquidity
ARRANGING TO SPEND, SAVE AND INVEST MONEY TO LIVE COMFORTABLY…
THE THINGS YOU WANT TO ACCOMPLISH.
THE BELIEFS AND PRINCIPLES YOU CONSIDER IMPORTANT, CORRECT, A…
THE ABILITY TO EASILY CONVERT FINANCIAL ASSETS INTO CASH WITH…
Personal Financial planning
ARRANGING TO SPEND, SAVE AND INVEST MONEY TO LIVE COMFORTABLY…
Goals
THE THINGS YOU WANT TO ACCOMPLISH.
Financial Management Chapter 10 Vocabulary
Personal Financial Planning
Goals
Values
Liquidity
Spending, saving, and investing money to be able to live the…
Things you want to accomplish.
The principles we consider important.
Easily convert financial assets into money without losing val…
Personal Financial Planning
Spending, saving, and investing money to be able to live the…
Goals
Things you want to accomplish.
17 terms
Chapter 10 Vocabulary Financial Management
Personal financial planning
Goals
Values
Liquidity
Arranging to spend, save, and invest money to live comfortabl…
Things that you want to accomplish in the future.
Beliefs and principles that you consider important.
The ability to easily convert financial assets into cash with…
Personal financial planning
Arranging to spend, save, and invest money to live comfortabl…
Goals
Things that you want to accomplish in the future.
Financial Management T/F Chapter 10
The discounted free cash flow model fo…
equity value can be interpreted as the…
To estimate a firm's enterprise value,…
Rwacc is the weighted average cost of…
true
false
true
true
The discounted free cash flow model fo…
true
equity value can be interpreted as the…
false
6 terms
Economics and Financial Management-Chapter 10
Business case
Entrepreneur
Gantt chart
Intrapreneur
A business plan or other presentation that convinces the revi…
A person starting or managing their own business enterprise
A type of bar chart that enables the visualization of a proje…
An employee working within an organization to improve product…
Business case
A business plan or other presentation that convinces the revi…
Entrepreneur
A person starting or managing their own business enterprise
62 terms
Chapter 10: Mastering Financial Management
plan
3 steps of financial planning
traditional approach of budgeting
four primary sources of funds
an outline of the actions by which an organization tends to a…
establish organizational goals and objectives, budget the mon…
each new budget is based on the dollar amounts contained in t…
sales revenue, equity capital, debt capital, and proceeds fro…
plan
an outline of the actions by which an organization tends to a…
3 steps of financial planning
establish organizational goals and objectives, budget the mon…
6 terms
Financial Management; Chapter 10 - Valuation and Rates of Return
Collections and purchase schedules (11…
Inventory Methods (111-3 DQ):
Inventory Turnover and Purchasing Need…
Rapid Corporate Growth (111-5 DQ):
Relationship to borrowing needs of the corporation (LO4-4)
Inflation - What are the implications to use LIFO and FIFO in…
Relationship between ... (LO4-2)
Sales and profits rapid growth can cause financing problems:…
Collections and purchase schedules (11…
Relationship to borrowing needs of the corporation (LO4-4)
Inventory Methods (111-3 DQ):
Inflation - What are the implications to use LIFO and FIFO in…
65 terms
Financial Management Chapter 10- Test 3
-Debt, Preferred Stock, and Common Equ…
-New common Stock and Retained Earnings
-Notes Payable and Long Term Debt
-Slide 3
-What does Capital consist of?
-What does Common Equity Consist of?
-What does Debt consist of?
-Calculating the Weighted Average Cost of Capital Formula
-Debt, Preferred Stock, and Common Equ…
-What does Capital consist of?
-New common Stock and Retained Earnings
-What does Common Equity Consist of?
Chapter 10 Vocabulary Words (Financial Management)
personal financial planning
goals
values
liquidity
arranging to spend, save, and invest money to live comfortabl…
things you want to accomplish
the beliefs and principles you consider important, correct, a…
the ability to easily convert financial assets into cash with…
personal financial planning
arranging to spend, save, and invest money to live comfortabl…
goals
things you want to accomplish
10 terms
Financial Management Midterm 2- Chapter 10
Incremental Cash Flows
Stand-Alone Principle
Sunk Costs
Opportunity cost
the difference between a firm's cash flows with a project and…
The assumption that evaluation of a project may be based on t…
a cost that has already been incurred and cannot be removed a…
the most valuable alternative that is given up if a particula…
Incremental Cash Flows
the difference between a firm's cash flows with a project and…
Stand-Alone Principle
The assumption that evaluation of a project may be based on t…
35 terms
Chapter 10 Motivation
Motivation
Goal-Setting Theory
Stretch Goals
Vertical goals
Forces that energize, direct, and sustain a person's efforts.…
Setting goals is perhaps considered the most important and us…
Targets that are exceptionally demanding and that some people…
are aligned with current activities, including productivity a…
Motivation
Forces that energize, direct, and sustain a person's efforts.…
Goal-Setting Theory
Setting goals is perhaps considered the most important and us…
Financial Management FIN 3400 Chapter 10
What factors influence the bondholders…
Preferred stock has a constant annual…
Common stock has a constant annual div…
What needs to be known to determine th…
real rate of return... risk premium... inflation premium
5%
$25
discount rate & future cash flows
What factors influence the bondholders…
real rate of return... risk premium... inflation premium
Preferred stock has a constant annual…
5%
30 terms
Chapter 10: The Investment Function in Financial-Services Management
Money market instruments
Capital market instruments
U.S. Treasury bill
Treasury notes
Investment instrument that reaches maturity within one year a…
Investment instrument that have remaining maturities beyond o…
Money market short term instruments. It is a debt obligation…
Money market instrument. 1 to 10 years in maturity. When they…
Money market instruments
Investment instrument that reaches maturity within one year a…
Capital market instruments
Investment instrument that have remaining maturities beyond o…
64 terms
Chapter 10: Influences on Financial Management
What are the 5 influences on financial…
Define internal finance
Define owners equity
How can equity capital be raised?
1. Internal sources of finance... 2. Global market influences... 3.…
The funds provided by the business owners or from the outcome…
The funds contributed by owners or partners to establish and…
- Taking on additional partners ... - Issuing private shares
What are the 5 influences on financial…
1. Internal sources of finance... 2. Global market influences... 3.…
Define internal finance
The funds provided by the business owners or from the outcome…
19 terms
Financial Management Ch 10
Valuation of Financial Assets
Valuation of a Financial Asset is base…
Bond
Valuation of a Bond
Relationship between time value of money, required return, co…
determining present value of future cash flows.
Provides annuity stream of interest payments and principal pa…
Σ (Interest Payments/((1+Yield)^period)) + (Price/((1+Yield)^…
Valuation of Financial Assets
Relationship between time value of money, required return, co…
Valuation of a Financial Asset is base…
determining present value of future cash flows.
29 terms
Chapter 10: Banking and the Management of Financial Institutions
asset management
balance sheet
capital adequacy management
compensating balances
the acquisition of assets that have a low rate of default and…
a list of the assets and liabilities of a bank (or firm) that…
a bank's decision about the amount of capital it should maint…
a required minimum amount of funds that a firm receiving a lo…
asset management
the acquisition of assets that have a low rate of default and…
balance sheet
a list of the assets and liabilities of a bank (or firm) that…
61 terms
Personal Financial Literacy Chapter 10
Adjustable Rate Mortgage
Annual Percentage Rate
Collateral
Cosigner
Mortgage with a rate that may go up or down. Rate changes at…
Interest rate that shows what a borrower is actually paying w…
Assets that have been pledged against a loan repayment.
A person, other than the original borrower who signs for a lo…
Adjustable Rate Mortgage
Mortgage with a rate that may go up or down. Rate changes at…
Annual Percentage Rate
Interest rate that shows what a borrower is actually paying w…
10 terms
Financial Management CH 10
Discounted Free Cash Flow Model
Weighted Average Cost of Capital(WACC)
Method of Comparables
Valuation Multiple
a method for estimating a firm's enterprise value by discount…
the cost of capital that reflects the risk of the overall bus…
an estimate of the value of a firm based on the value of othe…
a ratio of a firm;s value to some measure of the firm's scale…
Discounted Free Cash Flow Model
a method for estimating a firm's enterprise value by discount…
Weighted Average Cost of Capital(WACC)
the cost of capital that reflects the risk of the overall bus…
Financial Management chapter 10 test study guide
6 steps to financial planning process
5 risk factors
Liquidity
Short-term goals
1. Determine your current financial situation.... 2. Develop you…
1. Inflation risk ... 2. Interest rate risk ... 3. Income risk ... 4.…
The ability to easily convert financial assets into cash with…
Goals that takes one year or less to achieve (such as saving…
6 steps to financial planning process
1. Determine your current financial situation.... 2. Develop you…
5 risk factors
1. Inflation risk ... 2. Interest rate risk ... 3. Income risk ... 4.…
36 terms
Bus 101 Chapter 10: Financial Management Key Terms
Budgets
Buyers
Capital Budgets
Cash Flow Budgets
Used as a roadmap to guide the activities of the firm. How th…
Perform similar activities similar to the purchasing manager.…
Aid in decisions related to the purchase of LONG-TERM ASSETS…
Show cash flow surpluses and shortfalls over SHORTER periods…
Budgets
Used as a roadmap to guide the activities of the firm. How th…
Buyers
Perform similar activities similar to the purchasing manager.…
52 terms
Chapter 10/11/14/15 Financial Management VOCAB
If you buy an asset of any sort, your…
Because the government can always rais…
The excess that the additional return…
The average squared difference between…
Your return on investment
risk-free return
Risk premium
Variance
If you buy an asset of any sort, your…
Your return on investment
Because the government can always rais…
risk-free return
13 terms
Financial Accounting Chapter 10
Accrued Liabilities
Contingent Liability
Current Liabilities
Debt-to-Assets Ratio
Previously unrecorded expenses that need to be adjusted at th…
Potential liability that has arisen as the result of a past e…
Short-term obligations that will be paid in cash (or fulfille…
Measures the proportion of total assets financed by debt, com…
Accrued Liabilities
Previously unrecorded expenses that need to be adjusted at th…
Contingent Liability
Potential liability that has arisen as the result of a past e…
105 terms
Chapter 10 The Investment Function in Banking and Financial-Services Management
1. A(n) _________________________ is a…
2. Debt instruments issued by cities,…
3. The investment maturity strategy wh…
4. A(n) _________________________ is a…
Treasury Bill
Municipal Securities
Barbell Strategy
stripped security
1. A(n) _________________________ is a…
Treasury Bill
2. Debt instruments issued by cities,…
Municipal Securities
30 terms
Financial Literacy - Chapter 10 - Terms
bear market
bond
bull market
contingencies
period in the stock market when prices are steadily decreasing
a debt instrument issued by a corporation or government
period in the stock market when prices are steadily increasing
unplanned or possible events
bear market
period in the stock market when prices are steadily decreasing
bond
a debt instrument issued by a corporation or government
23 terms
Financial Accounting Chapter 10
Current Liabilities
Accrued Liabilities
Payroll Deductions
Sales Tax Payable
short-term obligations that will be paid or fulfilled within…
liabilities for expenses that have been incurred but not paid…
create current liabilities for your employer and include inco…
recorded as a liability (not an expense) until it is forwarde…
Current Liabilities
short-term obligations that will be paid or fulfilled within…
Accrued Liabilities
liabilities for expenses that have been incurred but not paid…
10 terms
Chapter 10 Valuation of financial assets
Required rate of returns
Bond valuation
Stock valuation
Business risk
The minimum rate of return required by an investor, a stipula…
Bond valuation is a technique for determining the fair value…
Based on the present value of future cash flows
The inability of the firm to hold its competitive position an…
Required rate of returns
The minimum rate of return required by an investor, a stipula…
Bond valuation
Bond valuation is a technique for determining the fair value…
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