Chapter 9 - Finance

Measure the rate of return a firm earns on various measures of investment

Arrangement between a firm and a bank

Funds that a firm uses to acquire assets and finance its operations

Financial opportunities with high rates of return are riskier \

Spontaneous financing granted by sellers for customers without requiring immediate payment

A guaranteed line of credit in which a bank provides

A mix of equity and debt financing that a firm uses to meet its permanent financing needs

A restriction lenders impose on borrowers as a condition of providing long-term debt financing

can quickly be converted into cash with little risk of loss

Amount of money that would grow to become some future amount in a specified number of periods

Principle that a dollar received today is worth more than a dollar received in the future

A detailed forecast of future cash flows that helps financial managers

A projection showing how a firm’s budgeted sales and costs will affect expected net income

Part of a firm’s net income that is reinvested

Law written that strengthened government oversight of financial markets

Funds provided by lenders (creditors)

Safe and highly liquid assets that many firms list with their cash holdings

Financial rations that measure how effectively a firm uses its assets to generate revenue

Short-term marketable IOUs issued by the U.S. federal government

Computing ratios that compare values of key accounts listed on financial statements

The procedure a firm uses to evaluate long-term investment proposals

the degree of uncertainty regarding the outcome of a decision

A projected financial statement that forecasts the types & amounts of assets a firm will need

Measure the extent to which a firm relies on debt financing in its capital structure

Acquiring and using funds to maximize value

Measure the ability of a firm to obtain the cash it needs to pay its short-term debt

Funds provided by the owners of a company

Provides short-term financing to firms by purchasing accounts receivables at a discount

Short-term promissory notes issued by large corporations (IOUs)

Financing that arises during the natural course of business without the special arrangements

Pool funds from many investors and use these funds to purchase safe, highly liquid securities