BU121 Chapter Notes - Chapter 5: Mortgage Loan, Operational Risk, Cash Flow
Document Summary
Financial management - art/science of managing a company"s money to meet goals. A inancial manager uses inancial statements and other informaion prepared by accountants to make inancial decisions. They focus on cash lows, and plan and monitor the company"s cash lows to ensure that cash is available when needed. Financial planning - preparing the inancial plan (project revenues, expenditures and inancing needs over a given period. Investment (spending money) - invesing funds into projects and securiies that provide high returns to their risks. Financing (raising money) - obtaining funding and seeking the best balance between debt and equity. Main goal is to maximize value of company to owners. Financial manager has to consider long and short term results of acions. Short term gain is associated with forgoing long term beneit (could be detrimental to company) Higher the risk, higher the return (risk-return tradeof)
