MGMT 1P93 Lecture 10: Chapter 8 - Finance
16 Jan 2019
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Document Summary
Financial capital: funds a firm uses to acquire its assets and finance its operations. Use capital is used to meet long-term obligations. Use capital to pay for products and to pay investors. Finance: functional area of business that is concerned with finding the best sources and uses of financial capital. Financial managers emphasize market price of stock because of legal and ethical obligation (fiduciary duty) Risk: degree of uncertainty regarding the outcome of a decision. Risk-return trade-off: the observation that financial opportunities that offer high rates of return are generally riskier than opportunities that offer lower rate of returns. Budgeting: management tool that explicitly shows how firms will acquire and use the resources needed to achieve its goals. How they intend to achieve the goals the set when they planned it. Encourages communication and coordination among managers and employees in various departments. Identify projected sales and production goals and the various costs the firm will incur to meet these goals.
