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Definition
| The science and art of managing money |
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Term
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| The area of finance concerned with The design and delivery of advice and financial products to individuals, businesses, and governments. |
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Term
Managerial finance
Financial Manager |
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Definition
| Managerial finance is concerned with the duties of the financial manager working in a business. Financial managers administer the financial affairs of all types of business -private and public, large and small, profit seeking and not for profit. Tasks such as developing a financial plan or budget, extending credit, evaluate expenses, raise money to fund firm's operations. |
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| A business owned by one person who operates it for his or her won profit. 73% of businesses. This type of business has unlimited liability. This gives creditors the right to make claims against the owner's personal assets to recover debts owned by the business. Percentage of receipts is 5% |
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Definition
| A business owned by two or more people and operated for profit. 7% of businesses. Typically larger than sole ownership they are commonly finance, insurance and real estate industry. Percentage of receipts is 6% |
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| The written contract used to formally establish a business partnership.In a general partnership all partners have an unlimited liability and each partner is legally liable for all of the debts of the partnership. |
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Definition
Owners have limited liability. Can achieve large size via sale of ownership. Ownership is readily transferable. Long life of the firm. Can hire professional managers. Has better access to financing. Taxes generally higher. More expensive to organize. Subject to greater government regulation. Lacks secrecy
The largest businesses are incorporated.Percentage of receipts is 90% |
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Definition
| The owners of a corporation, whose ownership or equity takes the form of either common stock or preferred stock. |
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Definition
| The purest and most basic form of corporate ownership |
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Term
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Definition
| Periodic distributions of cash to the stockholders of a firm. |
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| Organizations that have limited liability and typically have fewer than 100 owners |
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Definition
| limited partnership, S corporation, limited liability company and limited liability partnership |
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Term
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Definition
| The amount earned during the period on behalf of each outstanding share of common stock, calculated by dividing the period's total earnings available for the firm's common stockholders by the number of shares of common stock outstanding. |
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Definition
| Prepares the firm's financial plans and budgets. Other duties include financial forecasting, performaing financial comparisons, and working closely with accounting. |
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| capital expenditures manager |
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Definition
| Evaluates and recommends proposed long-term investments. May be involved in the financial aspects of implementing approved investments. |
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Term
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Definition
| Arranges financing for approved long-term investments. Coordinates consultants, investment bankers, and legal counsel. |
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Term
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Definition
| Maintains and controls the firm's daily cash balances. Frequently manages the firm's cash collection and disbursement activities and short-term investments and coordinates short term borrowing and banking relationships. |
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Definition
| Administers the firm's credit policy by evaluating credit applications, extending credit, and monitoring and collecting accounts receivable. |
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Definition
| Oversees or manages the assets and liabilities of the employee's pension fund. |
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Term
| What is the goal of the firm? |
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Definition
| The goal is to maximize the wealth of the owners for whom it is being operated, or equivalently to maximize the stock price. |
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Definition
| The amount earned during the period on behalf of each outstanding share of common stock, calculated by dividing the period's total earnings available for the firm's common stockholders by the number of shares of common stock outstanding. |
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Term
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Definition
| The chance that actual outcomes may differfrom those expected. |
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Term
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Definition
| Requiring compensation to bear risk. |
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Definition
| Groups such as employees, customers, suppliers, creditors, owners, and others who have a direct economic link to the firm. |
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Term
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Definition
| Standards of conduct or moral judgment that apply to persons engaged in commerce. |
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Definition
| The firm's chief financial manager, who manages the firm's cas, oversees its pension plans, and manages key risks. |
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Definition
| The firm's chief accountant, who is responsible for the firm's accounting activities, such as corporate accounting, tax management, financial accounting, and cost accounting. |
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Definition
| The manager responsible for managing and monitoring the firm's exposure to loss from currency fluctuations. |
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Term
| marginal cost-benefit analysis |
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Definition
| The economic principle that states that financial decisions should ve made and actions taken only when the added benefits exceed the added costs. Nearly all financial decisions ultimately come down to an assessment of their marginal benefits and marginal costs. |
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Term
| Two basic differences between finance and accounting |
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Definition
| One is related to the emphasis on cash flows and the other to decision making. Accountants devote most of their attention to the collection and presentation of financial data. Financial managers evaluate the accounting statements, develop additional dat, and make decisions on the basis of their assessment of the associated returns and risks. |
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Term
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Definition
| In preparation of financial statements, recognizes revenue at the time of sale and recognizes expenses when they are incurred. |
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Term
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Definition
| Recognizes revenues and expenses only with respect to actual inflows and outflows of cash. Financial managers emphasize cash flows. |
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Definition
| The rules, processes, and laws by which companies are operated, controlled, and regulated. This ensures that the company is run in a lawful and ethical fashion, in accordance with best practices. |
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Definition
| Investors who own relatively small quantities of shares so as to meet personal investment goals. |
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Term
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Definition
| Investment professionals, such as banks, insurance companies, mutual funds, and pension fuds, that are paid to manage and hold large quantities of securities on behalf of others. |
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Term
| Sarbanes-Oxley Act of 2002 |
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Definition
| An act aimed at eliminating corporate disclosure and conflict of interest problems. Contains provisions about corporate financial disclosures and the relationships among corporations, analysts, auditors, attorneys, directors, officers, and shareholders. |
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Term
| principal-agent relationship |
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Definition
| An arrangement in which an agent acts on the behalf of a principal. For example, shareholders of a company elect management to act on their behalf. |
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Definition
| Problems that arise when managers place personal goals ahead of the goals of the shareholders |
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Term
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Definition
| Costs arising from agency problems that are borne by shareholders and represent a loss of shareholder wealth |
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Term
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Definition
| Management compensation plans that tie management compensation to share price, cone example involves the granting of stock options |
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Term
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Definition
| Options extended by the firm that allow management to benefit from increases in stock prices over time |
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Term
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Definition
| Plans that tie management comnsation to measures such as earnings per share or growth in EPS. Performance shares and/or cash bonuses are used as compensation under these plans. |
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Term
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Definition
| Shares of stock given to manaement for meeting stated performance goals. |
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Term
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Definition
| Cash paid to management for achieving certain performance goals. |
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Term
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Definition
| When a firm's internal corporate governance structure is unable to keep agency problems in check, it is likely that rival managers will try to gain control of the firm. |
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