AFM131 Study Guide - Final Guide: Unsecured Debt, Revolving Credit, Cash Flow

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM131
• Professor: Bob Sproule

Document Summary

Finance is all about managing the funds of a business (interpretation of financial data versus accounting - preparing accounting data) preparing budgets doing cash flow analysis obtaining of funds for long-lived assets (see figure 17. 1 on page 520) Three most common ways for firms to fail financially: undercapitalization - insufficient funds to start, poor control over cash flows - matching cash inflows to cash outflows. Inadequate expense control - expenses too high in relation to revenues. Forecasting financial needs: short term forecast of up to one year of cash inflows and outflows from the day- to-day operations. Long term forecast of between 5 to 10 years of the products and or services sold and needs in terms of long-lived assets (what to buy/sell and how to finance. Financial control reviews actual performance on a monthly basis compares to approved budget: may require corrective action.