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Foundations of Business Ch. 16 Vocabulary

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Term
Definition
budget   a financial statement that projects income and expenditures or both over a specified future period  
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capital budget   a financial statement that estimates a firm’s expenditures for major assets and its long-term financing needs  
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cash budget   a financial statement that estimates cash receipts and cash expenditures over a specified period  
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cash flow   the movement of money into and out of an organization  
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collateral   real estate or property pledged as security for a loan  
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commercial   a short-term promissory note issued by a large corporation  
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common stock   stock whose owners may vote on corporate matters but whose claims on profits and assets are subordinate to the claims of others  
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equity capital   money received from the owners or from the sale of shares of ownership in a business  
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factor   a firm that specializes in buying other firms’ accounts receivable  
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financial management   all of the activities concerned with obtaining money and using it effectively  
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financial plan   a plan for obtaining and using the money needed to implement an organization’s goals  
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initial public offering (IPO)   occurs when a corporation sells common stock to the general public for the first time  
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investment banking firm   an organization that assists corporations in raising funds, usually by helping to sell new issues of stocks, bonds, or other financial securities  
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long-term financing   money that will be used for longer than one year  
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preferred stock   stock whose owners usually do not have voting rights but whose claims on dividends and assets are paid before those of common-stock owners  
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promissory note   a written pledge by a borrower to pay a certain sum of money to a creditor at a specified future date  
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retained earnings   the portion of a corporation’s profits not distributed to stockholders  
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securities exchange   a marketplace where member brokers meet to buy and sell securities  
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short-term financing   money that will be used for one year or less  
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trade credit   a type of short-term financing extended by a seller who does not require immediate payment after delivery of merchandise  
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unsecured financing   financing that is not backed by collateral  
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