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Chapter 10

chapter 10 textbook notes

3 Pages

Management (MGT)
Course Code
Chris Bovaird

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Chapter 10
·Financial manager: plan and control financial asset
increase firms value, improve financial status
·Financial manager increasing firms wealth
cash flow management: cash flow into firm (revenue), out of firm (debt payment)
Use idle cash to invest
·Finance: responsibility for long-term investment, pay it, everyday financial activities, manage risk
·Financial control: process of checking actual performance against plan, ensure desire financial status is
·Financial plan: how to reach financial position, include projection for source and uses of fund
·Credit policy: rules governing firms’ extension of credit to customer
·inventory: goods held by company and sell within a year
raw material inventory: basic supplies used to manufacture product
work in process inventory: goods partway through the product process
finished goods inventory: completed goods ready for sale
·Working capital
reduce working capital: more useful cash flow and raise earning permanently
·Long-term (capital) expenditure: not sold or convert into cash, expensive, long period of time
·Short-term funds
Trade credit: granting of credit by selling firm to buying firm
Open book credit: seller ship merchandise on faith
Promissory note: buyer sign promise to pay agreement before ship
Trade draft: buyer sign statement of payment term attached to merchandise by buyer
Trade acceptance: trade draft that been signed by buyer (international trade)
·Secured loan: short term loan required collateral
lower interest than unsecured
·Collateral: asset that lender has the right to seize if borrower doesnt pay (ex: inventory, account
receivable, stocks)
·Inventory loan: more attractive as collateral, because real security readily convert into cash
·Pledging AR: using account receivable as collateral for a loan (accept when its credit department
·Factoring: selling AR

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Chapter 10Financial manager plan and control financial assetincrease firms value improve financial statusFinancial manager increasing firms wealthcash flow management cash flow into firm revenue out of firm debt paymentUse idle cash to investFinance responsibility for longterm investment pay it everyday financial activities manage riskFinancial control process of checking actual performance against plan ensure desire financial status is achievedFinancial plan how to reach financial position include projection for source and uses of fundCredit policy rules governing firms extension of credit to customerinventory goods held by company and sell within a yearraw material inventory basic supplies used to manufacture productwork in process inventory goods partway through the product processfinished goods inventory completed goods ready for saleWorking capitalreduce working capital
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