1. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Financial Management and Banking

2. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 2 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

3. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 3 Implementing the Financial Plan Cash Flow Cash Reserves Electronic Cash ManagementMarketableSecuritiesInventoryControlAccountsReceivable and Payable

4. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 4 Operating Budget Revenues Expenses Cash Flows Master Budget Master Budget Financial Control Cost ControlExpenditures Plan for the Future

5. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 5 Request Review Evaluate Recommend Capital Budget Process

6. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 6 Financing Operations and Growth Length of Term Cost of Capital Debt or Equity

7. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 7 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

8. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 8 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

9. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 9 Cost of Capital Company Risk Opportunity Cost Interest Rates Quality Time Prime Rate Discount Rate Discount Rate Leverage Capital Structure Capital Structure

10. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 10 CharacteristicDebtEquity MaturitySpecificNonspecific Claim on IncomeFixed CostDiscretionary Cost Claim on AssetsPriorityResidual Influence Over Management LittleVariable Debt versus Equity

11. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 11 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

12. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 12 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

13. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 13 Checking and Savings Credit, Debit, and Smart Cards Financial Services Business Loans On-Line Payments and Electronic Banking

14. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 14 Checking and Savings Accounts Checking AccountSavings AccountDeposit Account Demand Deposit Accounts Statement Savings Accounts Money Market and CDs

15. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 15 Business Loans Expansion Construction Purchases Renovation

16. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 16 Short-Term Credit Credit Cards Debit Cards Smart Cards

17. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 17 Online Payment Systems AdvantagesDisadvantages Security of Personal Information Ease of Making Payments Easy to Set Up Account Maintenance Issues Software Problems Consumer Protection Issues

18. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 18 Electronic Banking AutomatedTellerElectronic Funds Transfer OnlineBanking

19. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 19 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

20. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 20 The Future of Banking Industry Competition Banking Ethics Crime and Terrorism

21. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 21 The Federal Reserve System Conducting Monetary Policy Stabilizing the Banking System Stabilizing the Economy Clearing Checks

22. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 22 Durable Portable Medium of Exchange Medium Measure of Value Measure Store Store Stable Divisible What is Money?

23. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 23 U.S. Money Supply Hard Currency Demand Deposits Time Deposits

24. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 24 Measuring the Money Supply

25. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 25 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

26. © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 26 Federal Reserve Functions SupplyingCurrency ClearingChecks