COMMERCE 1B03 Chapter Notes - Chapter 17: Root Mean Square
21 Oct 2016
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Document Summary
The value of understanding finance: 3 most common reasons why a firm fails financially, undercapitalization (insuf cient funds to start a business, poor control over cash ow. Financial planning: means analyzing short-term and long-term money ows to and from a rm. Commerce 1b03: objective optimize the rm"s pro tability and make the best use of its money, 3 steps: forecasting a rm"s short-term and long-term nancial needs. 1: developing budgets to meet those needs, establishing nancial control to see whether the company is achieving its goals. 3) establishing financial controls: financial control = process in which a rm periodically compares its actual revenue, costs, and expenses with its budget, also provides feedback to help reveal which accounts/departments/people are varying from the nancial plans. The needs for funds: key areas, managing day-to-day needs of the business, controlling credit operations, acquiring needed inventory, making capital expenditures.
