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Nickels McHugh McHugh

Nickels Cover. Nickels McHugh McHugh. Chapter. 19. Financial Management. Finance & Managers. What is Financial Management? Finance Financial Manager Importance of Finance. Most Important Skills Needed by CFOs. Source: CIO Enterprise. Non-Finance Functions of CFOs.

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Nickels McHugh McHugh

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  1. Nickels Cover Nickels McHugh McHugh

  2. Chapter 19 Financial Management

  3. Finance & Managers • What is Financial Management? • Finance • Financial Manager • Importance of Finance

  4. Most ImportantSkills Needed by CFOs Source: CIO Enterprise

  5. Non-FinanceFunctions of CFOs Source: CIO Enterprise

  6. What Financial Managers Do

  7. Where CFOs GetTheir Financial Information Source: USA Today

  8. Uses of Excess Funds Expansion Marketable Securities EXCESS Treasury Bills FUNDS Commercial Paper Certificates of Deposit Asset Purchases

  9. Financial Planning Process Forecast Cash Flow Short-term & Long-term Uses Budget Cash Needs Operating, Cash, & Capital Compare Results Modify Forecasts & Budgets Control Differences Actual vs. Projected Flows

  10. Financing DailyOperations- Cash Flows Money Received From: (Cash In) Business Expenses: (Cash Out) • Inventory Purchases • Payment on Loans • Payment on Assets • Salaries Payable • Supplies • Taxes • Credit Sales • Cash Sales • Investment Income

  11. Budget Process • Financial Plan- Financial Statements • Types of Budgets • Capital • Cash • Operating (Master) • Financial Controls- Feedback

  12. Ways to Cut Costs

  13. Need for Operating Funds • Manage Daily Operations • Manage Accounts Receivable • Acquire Inventory • Capital Expenditures

  14. Short-Term Trade Credit Promissory Notes Family/Friends Banks, etc. Secured Loan Unsecured Loan Factoring Commercial Paper Long-Term Debt Term-Loan Bonds Secured Unsecured Equity Stock Retained Earnings Venture Capital Sources of Funds

  15. Who Can Issue Bonds? • Federal, state, and local governments • Federal government agencies • Corporations • Foreign governments and corporations

  16. Sources of Equity Financing Retained Earnings Internal Sources Owner Contributions Sale of Partnerships Equity Capital Venture Capital External Sources Public Sale of Stock

  17. Venture Capital Investments In Billions Source: National Venture Capital Association

  18. Number ofVenture Capital Deals Source: National Venture Capital Association

  19. Common Stock $ 50,000 Bonds (@10%) $450,000 Funds Raised $500,000 Earnings $ 125,000 Less: Bond Interest $ 45,000 Total Earnings $ 80,000 Return to $80,000 Stockholders $50,000 Common Stock $500,000 Bonds (@10%) 0 Funds Raised $500,000 Earnings $ 125,000 Total Earnings $ 125,000 Return to $125,000 Stockholders $500,000 Making Use of Leverage Leverage- Selling Bonds Equity- Sale of Stock = = 160% = = 25%

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