Textbook Notes (363,090)
Canada (158,185)
MGTA02H3 (361)
Chapter 10

Chapter 10 summary notes

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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

MGTA04 Chapter 10 THE ROLE OF THE FINANCIAL MANAGER - financial managers: managers responsible for planning and overseeing the financial resources of a firm. - finance (corporate finance): the business function involving decisions about a firms long- term investments and obtaining the funds to pay for those investments Objectives of the Financial Manager - collect funds, pay debts, establish trade credit, obtain loans, control cash balances and plan for future financial needs - increase a firms value -> stock holders wealth Responsibilities of the Financial Manager - cash flow management: managing the pattern in which cash flows into the firm in the form of revenues and out of the firm in the form of debt payments - financial control: the process of checking actual performance against plans to ensure that the desired financial status is achieved - financial plan: a description of how a business will reach some financial position it seeks for the future; includes projections for sources and uses of funds WHY DO BUSINESSES NEED FUNDS? - every company need $ to survive Short-Term (Operating) Expenditures - incurs regularly in everyday business activities - fin. managers must know in advance the amount of accounts payable to be repaid and when - fin. managers need to know how much accounts receivable are out and when will they receive - credit policy: rules governing a firms extension of credit to customers - inventory: materials and goods currently held by the company that will be sold win the year - must be well managed (much or too few is bad) - raw materials inventory: portion of a firms inventory consisting of basic supplies used to manufacture products for sale - work-in-process inventory: portion of a firms inventory consisting of goods partway through the production process - finished goods inventory: portion of a firms inventory consisting of completed goods ready for sale - reducing working capital (inventories,AR-AP) means saving $ Long-Term (Capital) Expenditures - companies need $ to cover long-term expenditures for fixed assets - they require more planning bc theyre not normally sold, acquisition requires large investment, represent a binding commitment of company funds. SOURCES OF SHORT-TERM FUNDS 1 www.notesolution.com
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