© Prentice Hall, 2005Business In Action 3eChapter 3 - 1 Competing in the Global Economy.
© Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial...
-
Upload
annice-cooper -
Category
Documents
-
view
218 -
download
1
Transcript of © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial...
![Page 1: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/1.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 1
Keeping theKeeping theEngine Running:Engine Running:
Financial Management Financial Management and Bankingand Banking
![Page 2: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/2.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 2
The Role of Financial The Role of Financial ManagementManagement
• Current needs
• Future needs
–Sources of funds
–Uses of funds
–Maximizing company value
![Page 3: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/3.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 3
Implementing the Implementing the Financial PlanFinancial Plan
• Monitoring cash flow
–Accounts receivable and payable
– Inventory control
• Managing cash reserves
–Marketable securities
–Electronic cash management
![Page 4: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/4.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 4
Operating BudgetOperating Budget
• Master budget
–Cost control
–Expenditures
–Plan for the future
–Financial control
![Page 5: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/5.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 5
Capital Budget ProcessCapital Budget Process
• Request
• Review
• Evaluate
• recommend
![Page 6: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/6.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 6
Financing Operations Financing Operations and Growthand Growth
• Length of term
• Cost of capital
• Debt or equity
![Page 7: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/7.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 7
Length of TermLength of Term
• Less than one year
–Short-term financing
• Greater than on year
–Long-term financing
![Page 8: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/8.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 8
Long-Term FinancingLong-Term Financing
• Internal sources
–Retained earnings
–Sale of assets
• External sources
–Debt capital
–Equity capital
![Page 9: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/9.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 9
Cost of CapitalCost of Capital
• Company risk
• Interest rates
• Opportunity cost
![Page 10: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/10.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 10
Debt versus EquityDebt versus Equity
Characteristic Debt Equity
Maturity Specific Nonspecific
Claim on Income Fixed Cost Discretionary Cost
Claim on Assets Priority Residual
InfluenceOver Management
Little Variable
![Page 11: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/11.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 11
Types of Debt FinancingTypes of Debt Financing
• Trade credit
• Commercial paper
• Secured loans
• Unsecured loans
• Leases
• Bonds
![Page 12: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/12.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 12
The U.S. Financial The U.S. Financial SystemSystem
DepositDeposit
Commercial banks
Savings and loans
Mutual savings banks
Credit unions
NondepositNondeposit
Insurance companies
Pension funds
Finance companies
Brokerage firms
![Page 13: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/13.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 13
Financial ServicesFinancial Services
• Checking and savings accounts
• Business and consumer loans
• Credit, debit, and smart cards
• Electronic banking
![Page 14: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/14.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 14
Checking and Savings Checking and Savings AccountsAccounts
• Demand deposits
• Statement savings
• Money market and CDs
![Page 15: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/15.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 15
Business LoansBusiness Loans
• Expansion
• Construction
• Purchases
• Renovation
![Page 16: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/16.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 16
Short-Term CreditShort-Term Credit
• Credit cards
• Debit cards
• Smart cards
![Page 17: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/17.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 17
Online Payment SystemsOnline Payment Systems
• Advantages– Security– Ease of use– Easy to set up
• Disadvantages– Account maintenance– Software– Consumer protection
![Page 18: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/18.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 18
Electronic BankingElectronic Banking
• Automated teller
• Electronic funds transfer
• Online banking
![Page 19: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/19.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 19
Bank Safety and Bank Safety and RegulationRegulation
• Federal deposit insurance corporation
• National credit union association
• State banking association
• Office of the comptroller of Currency
• Credit thrift supervision
• Federal reserve system
![Page 20: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/20.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 20
The Future of BankingThe Future of Banking
• Industry competition
• Banking ethics
• Crime and terrorism
![Page 21: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/21.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 21
The Federal ReserveThe Federal Reserve
• Conducting monetary policy
• Stabilizing the banking system
• Stabilizing the economy
• Clearing checks
![Page 22: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/22.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 22
What is Money?What is Money?
• Medium of exchange
• Measure of value
• Store of value
![Page 23: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/23.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 23
U.S. Money SupplyU.S. Money Supply
• Hard Currency
• Demand deposits
• Time deposits
![Page 24: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/24.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 24
Influencing the Money Influencing the Money SupplySupply
• Reserve requirements
• Discount rate
• Open-market operations
• Selective credit controls
![Page 25: © Prentice Hall, 2007Excellence in Business, 3eChapter 17 - 1 Keeping the Engine Running: Financial Management and Banking.](https://reader030.fdocuments.us/reader030/viewer/2022032414/56649ef55503460f94c0918b/html5/thumbnails/25.jpg)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 17 - 25
Federal Reserve Federal Reserve FunctionsFunctions
• Supplying currency
• Clearing checks