© Prentice Hall, 2007Excellence in Business, 3eChapter Financial Management and Banking

© Prentice Hall, 2007Excellence in Business, 3eChapter Role of Financial Management Rent and Utilities Plant and Equipment Materials Advertising-Promotions Distribution Wages, Salaries, Training Interest, Dividends, Taxes Sales from Operations Sales from Assets Retained Earnings Trade Credit Bonds Stocks Commercial Loans Management Decides How To Use Funds

© Prentice Hall, 2007Excellence in Business, 3eChapter Implementing the Financial Plan Cash Flow Cash Reserves Electronic Cash ManagementMarketableSecuritiesInventoryControlAccountsReceivable and Payable

© Prentice Hall, 2007Excellence in Business, 3eChapter Operating Budget Revenues Expenses Cash Flows Master Budget Master Budget Financial Control Cost ControlExpenditures Plan for the Future

© Prentice Hall, 2007Excellence in Business, 3eChapter Request Review Evaluate Recommend Capital Budget Process

© Prentice Hall, 2007Excellence in Business, 3eChapter Financing Operations and Growth Length of Term Cost of Capital Debt or Equity

© Prentice Hall, 2007Excellence in Business, 3eChapter Length of Term Short-Term FinancingLong-Term Financing Time Frame More Than One Year Less Than One Year Maintain Liquidity Meet Obligations Acquire Assets Fund Growth

© Prentice Hall, 2007Excellence in Business, 3eChapter Long-Term Loans Leasing Bonds Preferred Stock Common Stock Sale of Assets Retained Earnings Internal Sources Internal Sources Debt Capital Equity Capital External Sources External Sources Long-Term Projects Long-Term Projects Long-Term Financing Long-Term Financing click above title for web link click above title for web link

© Prentice Hall, 2007Excellence in Business, 3eChapter Cost of Capital Company Risk Opportunity Cost Interest Rates Quality Time Prime Rate Discount Rate Discount Rate Leverage Capital Structure Capital Structure

© Prentice Hall, 2007Excellence in Business, 3eChapter CharacteristicDebtEquity MaturitySpecificNonspecific Claim on IncomeFixed CostDiscretionary Cost Claim on AssetsPriorityResidual Influence Over Management LittleVariable Debt versus Equity

© Prentice Hall, 2007Excellence in Business, 3eChapter Open Account Purchases Short-Term Promissory Note Secured or Unsecured Owner Rents Asset To User Obligation of Repayment Plus Interest Trade Credit Commercial Paper LoansLeasesBonds Types of Debt Financing

© Prentice Hall, 2007Excellence in Business, 3eChapter The U.S. Financial System Deposit  Commercial banks  Savings and loans  Mutual savings banks  Credit unions Nondeposit  Insurance companies  Pension funds  Finance companies  Brokerage firms

© Prentice Hall, 2007Excellence in Business, 3eChapter Checking and Savings Credit, Debit, and Smart Cards Financial Services Business Loans On-Line Payments and Electronic Banking

© Prentice Hall, 2007Excellence in Business, 3eChapter Checking and Savings Accounts Checking AccountSavings AccountDeposit Account Demand Deposit Accounts Statement Savings Accounts Money Market and CDs

© Prentice Hall, 2007Excellence in Business, 3eChapter Business Loans Expansion Construction Purchases Renovation

© Prentice Hall, 2007Excellence in Business, 3eChapter Short-Term Credit Credit Cards Debit Cards Smart Cards

© Prentice Hall, 2007Excellence in Business, 3eChapter Online Payment Systems AdvantagesDisadvantages Security of Personal Information Ease of Making Payments Easy to Set Up Account Maintenance Issues Software Problems Consumer Protection Issues

© Prentice Hall, 2007Excellence in Business, 3eChapter Electronic Banking AutomatedTellerElectronic Funds Transfer OnlineBanking

© Prentice Hall, 2007Excellence in Business, 3eChapter Bank Safety and Regulation Federal Deposit Insurance Corporation National Credit Union Association State Banking Commission Office of the Comptroller of the Currency Office of Thrift Supervision Federal Reserve System

© Prentice Hall, 2007Excellence in Business, 3eChapter The Future of Banking Industry Competition Banking Ethics Crime and Terrorism

© Prentice Hall, 2007Excellence in Business, 3eChapter The Federal Reserve System Conducting Monetary Policy Stabilizing the Banking System Stabilizing the Economy Clearing Checks

© Prentice Hall, 2007Excellence in Business, 3eChapter Durable Portable Medium of Exchange Medium Measure of Value Measure Store Store Stable Divisible What is Money?

© Prentice Hall, 2007Excellence in Business, 3eChapter U.S. Money Supply Hard Currency Demand Deposits Time Deposits

© Prentice Hall, 2007Excellence in Business, 3eChapter Measuring the Money Supply

© Prentice Hall, 2007Excellence in Business, 3eChapter Influencing the Money Supply DecreaseIncrease LowerRaise BuySell Reserve Requirements Discount Rate Open-Market Operations Selective Credit Controls Fewer More To Increase Money Supply To Decrease Money Supply

© Prentice Hall, 2007Excellence in Business, 3eChapter Federal Reserve Functions SupplyingCurrency ClearingChecks