Financial Management
Analyzing the returns and risks of firms
What is financial management and investment management?
Hold shares of stock issued by the firm.
What is an owner?
Desire by people to spend on goods and services in the present rather than in the future.
What is time preference for consumption?
Net income after taxes minus dividends.
What is retained earnings?
Total cash receipts minus total cash payments.
What is net cash flow?
Involved in the decision making process by evaluating the future potential profit prospects of their firms' products and services.
What is financial managers?
Acronym for Chief Financial Officer.
What is CFO?
Interest earned on previous interest paid.
What is compound interest?
Largest source of external funding for most firms.
What is debt?
Total current assets minus total current liabilities.
What is net working capital?
Evaluate how well financial managers are handling capital budgeting and financial decisions.
What is investment managers?
Represent the interests of all shareholders, not just their personal interests.
What is the board of directors?
The chance that a borrower will be unable to pay back a debt.
What is a default risk?
Shareholders obtain ownership of the firm's assets and earnings by holding common stock.
What is common stock?
Investment managers who assist firms who want to raise funds from the financial marketplace.
What is investment bankers?
Financial manager responsible for managing cash, raising funds, and maintaining contracts with the financial marketplace.
What is the treasurer?
The added interest rate charged by the lender due to the default risk of the borrower.
What is default risk premium?
The acronym for Initial Public Offering.
What is IPO?
Investment managers who execute buy and sell orders for securities and often earn commission on the deals made.
What is a broker?
The main goal of a financial manager.
What is maximizing profits and minimizing risk?
Conflict between the managers and shareholders.
What is the principal agent conflict?
External revenue or funding from a bank.
What is debt?
A reward or cash that a company gives to its shareholders.
What is a dividend?
Investment managers who buy and sell securities for customers and hold inventories of stocks, bonds, or other financial assets.
What is a dealer?