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Finance Skills for Managers - D076 already graded A+ 2024/2025
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Finance Skills for Managers - D076 already graded A+ 2024/2025
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Finance Skills for Managers - D076Accounting - ANSThe system of recording, reporting, and summarizing past financial
information and transactions.
Accounts Receivable Turnover (AR Turnover) - ANSAn activity ratio found by credit sales
divided by accounts receivable.
Activity Ratios - ANSA category of ratios that measure how well a company uses its assets to
generate sales or cash, showing the firm's operational efficiency and profitability.
Additional Funds Needed (AFN) - ANSAnother name for the discretionary financing needed or
external financing needed. It represents the additional financing needed given a firm's
expectations for future growth.
Affirmative Covenants - ANSA bond covenant that describes things the company pledges itself
to do in order to protect bondholders.
Agency Costs - ANSCosts that are incurred when management does not act in the best interest
of shareholders.
Agency Problem - ANSWhen the agent (the management) does not act in the best interest of
the principal (the owners).
Aggressive Assets - ANSCompanies or securities with beta greater than 1.
Annual Percentage Rate - ANSThe annual interest rate that is charged for borrowing money or
that is earned through investment.
Annuity - ANSA stream of cash flows of an equal amount paid every consecutive period.
Annuity Due - ANSA series of equal payments made at the beginning of consecutive periods.
Asset Pricing - ANSThe process of valuing assets.
Auction Market - ANSA secondary market with a physical location and where prices are
determined by investors' willingness to pay.
Average Collection Period (ACP) - ANSAn activity ratio found by the number of days in a year
(365) divided by AR turnover.
, Balance Sheet Forecasting - ANSUsing sales growth and the profit forecast to construct a pro
forma balance sheet to understand the future implications of the sources and uses of finances.
Banks and Credit Unions - ANSReceive deposits and extend loans to individuals and
businesses.
Benchmarking - ANSThe process of completing a financial analysis to compare a firm's financial
performance to that of other similar firms.
Beta - ANSA variable that describes how the price of a security varies with the market.
Bid-ask Spread - ANSThe difference between the bid and ask prices that compensate the
specialist for the risk that he or she bears for willingness to provide liquidity.
Board of Directors - ANSA group of people who jointly supervise the activities of an
organization.
Bond Indenture - ANSA legal contract that governs the relationship between a firm and its
bondholders.
Bondholders - ANSA person who loans a corporation money by buying debt securities.
Business Finance - ANSAn area of finance that deals with sources of funding, the capital
structure of corporations, the actions that managers take to increase the value of the firm to its
owners, and the tools and analysis used to allocate financial resources.
Cannibalization - ANSThe reduction in sales of a company's own products due to introduction of
another similar product.
Capital - ANSA financial asset that can be used by a firm or individual. Examples of capital may
be machinery or cash held by a firm.
Capital Asset Pricing Model (CAPM) - ANSA model used to determine the risk-return
relationship for an asset.
Capital Budgeting - ANSThe process of evaluation and planning for purchases of long-term
assets.
Capital Budgeting Criteria - ANSMetrics and calculations used to determine whether a project or
asset will add value and be a worthwhile investment.
Capital Investment - ANSThe sum of money invested in a business to purchase long-term
assets to further its objective of maximizing owner wealth.
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