Finance Skills for Managers - D076

Finance Skills for Managers - D076 4.7 (9 reviews) Students also studied Terms in this set (200) Western Governors UniversityD 196 Save (TEST) Finance Skills for Managers - ...56 terms travis_ketcham8 Preview WGU D080 Managing in a Global Bu...250 terms mallory_pearce5 Preview WGU D076 unit tests 50 terms owennpreston Preview Finance 58 terms mar Practice questions for this set Learn1 / 7Study using Learn A category of ratios that measure a firm's ability to meet short-term obligations.AccountingThe system of recording, reporting, and summarizing past financial information and transactions.Accounts Receivable Turnover (AR Turnover)An activity ratio found by credit sales divided by accounts receivable.Activity RatiosA 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.Choose an answer 1Asset Management Ratios2Profitability Ratios 3Leverage Ratios4Liquidity Ratios Don't know?

Additional Funds Needed (AFN)Another 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 CovenantsA bond covenant that describes things the company pledges itself to do in order to protect bondholders.Agency CostsCosts that are incurred when management does not act in the best interest of shareholders.Agency ProblemWhen the agent (the management) does not act in the best interest of the principal (the owners).Aggressive AssetsCompanies or securities with beta greater than 1.Annual Percentage RateThe annual interest rate that is charged for borrowing money or that is earned through investment.AnnuityA stream of cash flows of an equal amount paid every consecutive period.Annuity DueA series of equal payments made at the beginning of consecutive periods.Asset PricingThe process of valuing assets.Auction MarketA secondary market with a physical location and where prices are determined by investors' willingness to pay.Average Collection Period (ACP)An activity ratio found by the number of days in a year (365) divided by AR turnover.Balance Sheet ForecastingUsing 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 UnionsReceive deposits and extend loans to individuals and businesses.BenchmarkingThe process of completing a financial analysis to compare a firm's financial performance to that of other similar firms.BetaA variable that describes how the price of a security varies with the market.Bid-ask SpreadThe 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 DirectorsA group of people who jointly supervise the activities of an organization.Bond IndentureA legal contract that governs the relationship between a firm and its bondholders.BondholdersA person who loans a corporation money by buying debt securities.

Business FinanceAn 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.CannibalizationThe reduction in sales of a company's own products due to introduction of another similar product.CapitalA 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)A model used to determine the risk-return relationship for an asset.Capital BudgetingThe process of evaluation and planning for purchases of long-term assets.Capital Budgeting CriteriaMetrics and calculations used to determine whether a project or asset will add value and be a worthwhile investment.Capital InvestmentThe sum of money invested in a business to purchase long-term assets to further its objective of maximizing owner wealth.Capital MarketsA type of financial market used for long-term assets that are held for greater than one year.Capital StructureThe mixture of debt and equity used to finance a firm.Capital-constrained EnvironmentWhen a limited amount of funds are available.Cash BudgetsA plan for controlling cash inflows and outflows business to balance income with expenditures.Cash ManagementManaging the day-to-day finance operations of a firm.Central BanksEnsure that a nation's economy remains healthy by controlling the amount of money circulating in the economy.Common StockA type of stock that represents equity in a firm and confers the right to vote at shareholder meetings.CompoundingFinding a future value given a present value.Compounding InterestThe interest on the principal plus the interest on earned interest.Corporate BondsA debt instrument that is issued by a corporation in order to raise capital.Corporate GovernanceThe system of rules, practices, and processes by which a firm is directed and controlled.CorrelationThe measure of the relationship between two variables that move in relation to each other.

Cost of CapitalThe cost to a firm to use an investor's capital; see interest rate.Coupon RateThe stated interest rate of a bond; also known as coupon yield.Coupon YieldThe stated interest rate of a bond; also known as coupon rate.CovenantsStatements in a bond indenture that outline things the company will obligate itself to do or not do in order to protect bondholders.Credit AnalystsA commercial bank position with the responsibility to assess the riskiness of lending to borrowers and determining whether or not loans should be extended to potential bank clients.Cross-sectional AnalysisComparing a firm's financial ratios to other firms' ratios or industry averages.CumulativeA feature of preferred stock specifying that if a company skips payment of a preferred stock dividend one year, it is still required to pay that dividend sometime in the future before paying any common dividends.Current Market ValueWhat someone would pay right now for an asset.Current RatioA liquidity ratio found by current assets divided by current liabilities.Dealer MarketA secondary market made up of multiple dealers that hold an inventory of securities and quote prices.Debt RatioA financing ratio found by total liabilities divided by total assets.Debt-to-equity RatioA financing ratios found by total liabilities divided by total equity.DefaultFailure to meet a debt obligation.Default RiskThe probability of a loss resulting from a borrower's failure to repay a contractual obligation; also called credit risk.Defensive AssetsCompanies or securities with beta less than 1.Discount BondA bond whose price is below its par value.Discount RateThe name for interest rate when used in time value of money calculations.DiscountingFinding a present value given a future value.Discretionary AccountsAccounts that do not vary automatically with sales but are left to the discretion of management.Discretionary Financing Needed (DFN)The additional financing needed given a firm's expectations for future growth.DiversificationThe process of "spreading" your money over many different assets.