The following will be discussed in this chapter: Role of the financial manager, why do businesses need funds? sources of short-term funds, sources of long-term funds, financial management for small business, risk management. | Lecture 30 Chapter 20 Understanding Financial And Risk Management Chapter Outline Role Of The Financial Manager Why Do Businesses Need Funds? Sources Of Short-Term Funds Sources Of Long-Term Funds Financial Management For Small Business Risk Management Responsibilities Of Financial Management Determine Long-Term Investments Obtain Funds To Pay For Investments Conduct Everyday Financial Activities Assist In Managing Risk Responsibilities Of Financial Manager Increase a company a firms value Cash-Flow Management- Cash Inflows & Outflows Financial Control- Performance Vs. Planned Results Budgets are backbone of financial control Financial Planning- Strategies To Reach Goals/Objectives Financial plan Financial Plan How Much Does Company Need To Meet Immediate Needs? When Will It Need More Funds? What Are The Sources For Short-Term & Long-Term Funds? Short-Term Expenditures Operating Needs Accounts Payable Accounts Receivable Credit policy – 2/10, net 30 Inventories Factors In Short-Term Needs Working Capital Adds inventories A/R minus A/P Current Assets – Current Liabilities Long-Term Expenditures Capital Needs Not Normally Converted Into Cash Requires Large Investment Binding, Long-Term Commitment By Company of its Funds Trade Credit Open-Book Credit Good faith agreement Promissory Notes Legally binding document to pay in future Trade Draft Vs. Trade Acceptance Trade Credit Trade Draft Vs. Trade Acceptance Attached to the merchandizing shipment On receipt, the buyers signs it Tells about the payment and the date After signing it becomes a trade acceptance Secured Short-Term Loans Collateral Inventory Loans Lends some portion of the inventory value Accounts Receivable Pledging Factoring Purchaser of the A/R known as the factor Unsecured Short-Term Loans No Collateral Compensating Balance Keep a portion of the loan amount with the bank in a non interest bearing account Line Of Credit Revolving Credit Agreement Commercial Paper Short-term securities containing the . | Lecture 30 Chapter 20 Understanding Financial And Risk Management Chapter Outline Role Of The Financial Manager Why Do Businesses Need Funds? Sources Of Short-Term Funds Sources Of Long-Term Funds Financial Management For Small Business Risk Management Responsibilities Of Financial Management Determine Long-Term Investments Obtain Funds To Pay For Investments Conduct Everyday Financial Activities Assist In Managing Risk Responsibilities Of Financial Manager Increase a company a firms value Cash-Flow Management- Cash Inflows & Outflows Financial Control- Performance Vs. Planned Results Budgets are backbone of financial control Financial Planning- Strategies To Reach Goals/Objectives Financial plan Financial Plan How Much Does Company Need To Meet Immediate Needs? When Will It Need More Funds? What Are The Sources For Short-Term & Long-Term Funds? Short-Term Expenditures Operating Needs Accounts Payable Accounts Receivable Credit policy – 2/10, net 30 Inventories Factors In Short-Term
