OVERVIEW, LEARNING OBJECTIVES, CLASS PREPARATION

CHAPTER 19-Mastering Financial Management

OVERVIEW
In this chapter, we define financial management as all the activities concerned with (1) obtaining money and (2) using it effectively. The chapter is organized around this two-part definition. We begin with brief explanations of the need for financing (both short-term and long-term) and the need to manage spending in accordance with established priorities. We develop the concept of sound financial management further in a discussion of organizational objectives, budgeting, and sources of funds, with illustrations from a small retail store. We devote the remainder of the chapter to an examination of various methods of obtaining funds. We discuss the types of unsecured short-term financing, including trade credit, promissory notes, bank loans, and commercial paper. Then we discuss loans secured by inventory, loans secured by receivables, and accounts receivable sold to a factor. Then we compare short-term financing methods with regard to cost. The methods used to obtain long-term financing are categorized under equity financing and debt financing including common stock, preferred stock, retained earnings, venture capital, private placements, loans, and corporate bonds. Finally, we compare long-term financing methods with regard to cost.

Format for Discussion Questions: Typed, (Question in bold) followed by double space and then your answer.
Assignments may be submitted in class paper copy, email, or via Blackboard.
Late assgnments will recieve a maximum of 50% credit

CLASS PREPARATION

READ Chapter 19, Video Case 19.1 Be prepared to discuss the questions at the end of the case
Answer Discussion Questions 4,5

CROSSWORD CLUES

CROSSWORD BOARD