A
Planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the business
What is financial management?
Financing needs for a short period of time, normally less than a year
What is short-term financing?
The net amount of cash being transferred into and out of a business
What is cash flow?
Capital extended to a business for a term of greater than a year
What is long-term financing?
A measure that compares the potential profit of a trade to its potential loss
What is the risk-return ratio?
The process of raising capital through the sales of shares of stock
What is equity financing?
Borrowed funds that must be repaid at a later date
What is debt capital?
A preset borrowing limit that can be used at any time
What is a line of credit?
A credit line you can borrow against and repay over and over again
What is a revolving credit agreement?
An item of value used to secure a loan
What is collateral?
A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount
What is a letter of credit?
Financing that is issued and supported only by the buyer's creditworthiness, rather than any type of collateral
What is unsecured financing?
A B2B agreement in which a customer can purchase goods on account without paying cash up front, paying the supplier at a later date
What is trade credit?
A written promise that one party will pay another party by a specified time
What is a promissory note?
A commonly used type of unsecured, short-term debt instrument issued by corporations
What is commercial paper?
The process of offering shares of a private corporation to the public in a new stock issuance
What is an initial public offering (IPO)?
The market in which firms sell new stocks and bonds to the public for the first time
What is the primary market?
The market where securities are traded after the company has sold its offering on the primary market
What is the secondary market?
The process of how securities are traded for companies that are not listed on a formal exchange such as the New York Stock Exchange (NYSE)
What is the over-the-counter market?
A security that represents ownership in a corporation that carries with it voting rights
What is common stock?
A class of ownership in a corporation that has a higher claim on assets and earnings than common stock has
What is preferred stock?
The amount of net income left over for the business after it has paid out dividends to shareholders
What is retained earnings?
A type of debt security that is issued by a corporation and sold to investors
What is a corporate bond?
Bonds issued by a company that is not secured by collateral
What are debenture bonds?
A bond that gives the holder the option to convert or exchange it for a predetermined number of shares of the issuing corporation
What is a convertible bond?