Summary
Summary General Business Lecture 13
- Course
- Institution
Summary of Lecture 13, General Business
[Show more]
Seller
Follow
theovoegele
Content preview
General Business S1/13(Finance)
What is Financial Management
Financial Management includes all the activities concerned with obtaining money and
using it effectively:
o determining the best ways to raise money
o ensuring that money is used in accordance with the organization’s goal
Need for financing
o when expenses are high, or sales are low
o opportunities to expand
Short-term financing:
o Money used for one year or less
o cash flow:
movement of money into and out of an organization
o inventory:
speculative production (the time lag between the actual production of
goods and when the goods are sold)
Long-term financing:
o money used for over a year (e.g., assets)
o Often involves large amounts of money
Risk return ratio:
o high-risk decision should generate higher financial returns for a business
o more conservative decisions often generate less returns
Planning - The Basis of Sound Financial Management
Financial plan:
o Document that outlines the funds needed for a certain period of time along
with the sources and intended uses of those funds
o Plan for obtaining and using the money needed to implement an
organization’s goals
Developing a financial plan
o establishing organizational goals and the forecasts of the firm’s short-term
and long-term financial needs have to be created
o determining how much money is needed to accomplish each goal (budgeting)
o identifying sources of funds
Goal:
o End result that an organization expects to achieve over a one- to ten-year
period
o must be specific, measurable, attainable, realistic and time limited
Forecasts:
o Short-term:
predict revenues, costs and expenses for a period of one year or less
o Long-term:
predict revenues, costs and expenses for a period longer than one year
and sometimes as long as five or ten years
o Cash-flow forecast:
, predict the cash inflows and outflows in future periods, usually months
or quarters
Three fundamental concepts:
Budgeting
Budget:
o financial statement that projects income and/or expenditures over a specified
future period
o sets forth management’s expectations for revenues and allocates the use of
specific resources throughout the company
o depend heavily on the balance sheet, the income statement, the statement of
cash flows and short-/long term financial forecasts
o budget is the guide for financial operations and expected financial needs
Budgeting challenges:
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller theovoegele. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $8.63. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
56326 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now