Textbook Notes (368,795)
Canada (162,165)
Commerce (1,696)
Chapter 17

COMMERCE 1BA3 Chapter 17: Chapter 17 Business Environment Notes
Premium

4 Pages
32 Views
Unlock Document

Department
Commerce
Course
COMMERCE 1BA3
Professor
Rita Cossa
Semester
Winter

Description
Chapter 17 Business Environment Notes • Finance: the function in a business that acquires funds for the firm and manages them within the firm • Financial management: the job of managing a firm's resources to meet its goals and objectives • Financial managers: examine the financial data prepared by accountants and recommend strategies for improving the financial performance of the firm • • Short-term forecast: predicts revenues, costs, and expenses for a period of one year or less • Cash flow forecast: predicts the cash inflows and outflows in future periods, usually months or quarters • Long-term forecast: predicts revenues, costs, and expenses for a period longer than one year, and sometimes as long as five or ten years. These forecasts are crucial in understanding the company’s future. • Budget: A financial plan that sets forth management's expectations for revenues and, on the basis of those expectations, allocates the use of specific resources throughout the firm • Capital Budget: highlights a firm's spending plans for major asset purchases that often require large sums of money, like property, buildings, and equipment. • Cash budget: estimates cash inflows and outflows during a particular period, like a month or a quarter (same as cash flow forecast) • Operating (master) budget: ties together the firm's other budgets and summarizes the business's proposed financial activities • Financial control: is a process in which a firm periodically compares its actual revenues, costs, and expenses with its budget • The crash of the financial markets in 2008 was on the fault of financial managers to do their job well • Financial managers must ensure that funds are available to meet daily cash needs without compromising the firm’s opportunities to invest money for its future • Capital expenditures: major investments in either tangible long-term assets, such as land, buildings, and equipment, or intangible assets, such as patents, trademarks, and copyrights. These are important if a company is looking to expand • Debt Financing: refers to funds raised through various forms of borrowing that must be repaid • Equity financing: money raised from operations within the firm or through the sale of ownership in the firm (shares) • Short-term financing: Refers to funds need for one year or less • Long-term financing: Refers to funds needed for more than one year (usually two to ten years) • Financial managers jobs put more importance on obtaining short-term funds rather than long-term • Trade credit: The practice of buying goods or services now and paying for them later • A term such as 2/10 net 30 would refer to taking a 2 percent discount of you pay in 10 days otherwise the full amount is due in 30 days • Promissory note: a written contract with a promise to pay a supplier a specific sum of money at a definite time. These are negotiable. • Banks, being sensitive to risk, generally prefer to lend short-term funds to larger, established businesses. Imagine the different types of business people who go to banks for a loan, and you will get a better idea of the requests bankers evaluate. Picture, for example, a farmer going to the bank in the spring to borrow funds for seed, fertilizer, supplies, and other needs that will be repaid after the fall harvest. • A secured loan: backed by collateral, something valuable such as property. If the borrower fails to pay the loan, the lender may take possession of the collateral • Unsecured loan: more difficult to obtain because it
More Less

Related notes for COMMERCE 1BA3

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit