BU121 Chapter Notes - Chapter 5: Enterprise Risk Management, High Tech, Investment
Document Summary
Financial manager: roles: financial planning, investment/spending money, financing/raising money, looking for a balance between opportunity for profit and potential for loss, risk-return trade-off: basic principle that states that the higher the risk, the greater the return. Value of a public corporation is measured by the price of its shares. Cash budgets: fo(cid:396)e(cid:272)ast a (cid:272)o(cid:373)pa(cid:374)(cid:455)"s cash inflows and outflows and helps the company plan for cash surpluses and shortages. Capital budgets: fo(cid:396)e(cid:272)ast a (cid:272)o(cid:373)pa(cid:374)(cid:455)"s outla(cid:455)s fo(cid:396) fi(cid:454)ed assets (cid:894)pla(cid:374)t a(cid:374)d e(cid:395)uip(cid:373)e(cid:374)t(cid:895) typically covering a period of several years. Operating budgets: combines with sales forecasts with estimates of production costs and operating expenses to forecast profits: based on individual budgets then used to plan operations such as units of production, amounts for raw materials, wages, etc. Bank loans: lines of credit, revolving line of credit: can have access to fu(cid:374)ds o(cid:374)(cid:272)e the(cid:455)"(cid:448)e (cid:271)ee(cid:374) paid off. Factoring: when a company sells its accounts receivable at a discount.
