1. Role & responsibilities of financial managers
1.1. Financial managers
1.1.1. examine financial data to recommend strategies to improve performance
1.2. Finance
1.2.1. responsible for acquiring & managing a firm's funds
1.3. Most common reasons for financial failure
1.3.1. undercapitalized
1.3.2. poor cash-flow management
1.3.3. inadequate expense control
2. Financial planning process & budgeting
2.1. forecasting
2.1.1. short-term
2.1.1.1. predicts revenues, costs, expenses for 1 year or less
2.1.2. long-term
2.1.2.1. predicts revenues, costs, expenses for > 1 year
2.2. budgets
2.2.1. details management's revenue expectations & resulting allocation of resources
2.2.2. 3 types:
2.2.2.1. capital
2.2.2.1.1. spending for major asset purchases
2.2.2.2. cash
2.2.2.2.1. estimates cash inflows & outflows
2.2.2.3. operating
2.2.2.3.1. ties together all firms budgets
2.3. financial control
2.3.1. process of comparing actual numbers with budget
3. Why need operating funds?
3.1. to cover 4 key operational areas:
3.1.1. managing day-to-day needs of the business
3.1.2. controlling credit operations
3.1.3. acquiring needed inventory
3.1.4. making capital expenditures
3.2. alternative sources of funds
3.2.1. debt financing
3.2.1.1. from borrowing money
3.2.2. equity financing
3.2.2.1. from sale of stock
3.2.3. short-term financing
3.2.3.1. for 1 year or less
3.2.4. long-term financing
3.2.4.1. for > 1 year
4. Short-term financing
4.1. used for short-term needs like buying inventory or meeting bills/payroll
4.2. Sources
4.2.1. trade credit
4.2.1.1. practice of buying things now & paying later
4.2.1.2. offered by sellers
4.2.1.3. least expensive & most convenient source
4.2.2. loans
4.2.2.1. family & friends
4.2.2.1.1. can create problems if all parties don't understand cash-flow
4.2.2.2. commercial banks
4.2.2.2.1. prefer to lend to larger, established businesses
4.2.2.3. 5 types of short-term loans
4.2.2.3.1. secured loan
4.2.2.3.2. unsecured
4.2.2.3.3. line of credit
4.2.2.3.4. revolving credit
4.2.2.3.5. commercial finance company
4.2.3. factoring accounts receivable
4.2.3.1. selling your accounts receivable at a discount for cash
4.2.3.2. accounts receivable is money owed to you for products you sold on credit
4.2.3.3. common in textile & furniture industries
4.2.4. commercial paper
4.2.4.1. promissory notes
4.2.4.2. $100,000 & up
4.2.4.3. must be repaid in 270 days or less
5. Long-term financing
5.1. 2 Major sources:
5.1.1. debt financing
5.1.1.1. borrowing money with a legal obligation to repay
5.1.1.2. 2 ways
5.1.1.2.1. borrow from lending institution
5.1.1.2.2. issue bonds
5.1.2. equity financing
5.1.2.1. 3 ways
5.1.2.1.1. selling stock
5.1.2.1.2. from retained earnings
5.1.2.1.3. from venture capital