Fm Concepts

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FINANCIAL MANAGEMENT CONCEPTS FOR
M.B.A II SEMESTER STUDENTS

| |ABC System : a System used to categorize inventory items to ensure that the most important ones are reviewed most often. | | |Account Receivable: A balance due from a customer. | | |Aggressive Working Capital Investment Policy : A policy under which holdings of cash, securities, inventories, and receivables are | | |minimized. | | |Aging Schedule : A report showing how long accounts receivable have been outstanding; it gives the percentage of receivables currently past| | |due and the percentages past due by specified periods. | | |Amortization Schedule: A schedule showing precisely how a loan will be repaid. It gives the required payment on each specified date and a | | |breakdown of the payment showing how much interest constitutes and how much repayment of principal constitutes. | | |Amortized Loan : A loan that is repaid in equal payments over its life. | | |Annual Report : A report issued annually by a corporation to its stockholders. It contains the basic financial statements, along with | | |management’s opinion of the past year’s operations and of the firm’s future prospects. | | |Annuity : A series of payments of an equal, or constant, amount for a specified number of periods. | | |Annuity Due : An annuity in which the payments occur at the beginning of each period. | | |Asset Management Ratios :A set of ratios which measures dhow effectively a firm is managing its assets; also called activity ratios. | | |Assets : All items which the firm owns. | | |Average Tax Rate : Taxes paid divided by taxable income. | | |Balance Sheet : A statement of the firm’s financial position at a specific point in time. | | |Basic Earning Power (BEP) Ratio : This ratio indicates the ability of the firm’s assets to generate operating income; computed by dividing | | |EBIT by total assets. | | |Bond : A long-term debt instrument. | | |Bond Ratings : Ratings assigned to bonds based on the probability of their default. Those bonds with the smallest default probability are | | |rated Aaa and carry the lowest interest rates. | | |Breakeven Analysis : An analytical technique for studying the relationship between fixed costs, variable costs, sales volume, and operating| | |profits. | | |Breakeven Point : The volume of sales at which total operating costs equal total revenues and operating income (EBIT) equals zero. | | |Business Risk : The risk associated with future operating income; the risk that would exist even if the firm’s operations...
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