Financial Management and Securities Markets (Managing Fixed Assets (Long…
Financial Management and Securities Markets
include cash, investments, accounts receivable, and inventory.
Managing Current Assets
are cash kept on hand by a business to pay normal daily business expenses.
The eurodollar market
is a market for trading U.S. dollars in foreign countries.
of financial managers who manage current assets is to maximize the returns on those assets.
are short-term debt obligations—accounts payable, wages payable, taxes payable, and notes (loans) payable.
Managing Current Liabilities
A line of credit
is an arrangement by which a bank agrees to lend a specified amount of money to the organization upon request—provided that the bank has the required funds to make the loan.
are backed by collateral that the bank can claim if the borrower does not repay the loan.
are backed only by the borrower’s good reputation and previous credit rating.
, the most widely used and important source of short-term financing, is credit extended by suppliers for the purchase of their goods and services.
Managing Fixed Assets
Long-term (fixed) assets
are those assets expected to last for many years, such as plants and equipment.
is the process of analyzing the needs of business and selecting the assets that will maximize its value.
Financing with Long-term Liabilities
are debts that will be repaid over a number of years, such as long-term loans and bond issues.
is a debt instrument that a company sells to raise long-term funds.
Types of Bonds
is the sale of stocks and bonds for corporations.
are stock exchanges where investors trade their securities with
other investors rather than the company that issued the stock or bonds.
Securities markets provide:
for buying and selling securities.
—the ability to turn securities into cash.
permit the trading of previously issued securities.