BUSN1010 4th test, 4,5,6

Cost of capital The expected rates of return for the different types of capital used to finance the business
Debt financing A method of financing in which a company receives a loan, issues bonds and receives trade credit and promises to repay it
Line of credit Unsecured credit extended to a borrower by a bank or vendor for a specific time period
Resolving credit Line of credit where, for a fee, a customer can borrow up to a preapproved amount and use funds as needed
Equity financing A method of financing in which a company issues shares of its stock, reinvests company earnings, or obtains funds from venture capitalists.
Promissory note A document signed by a borrower promising to repay a loan at a specific date or predetermined terms
Operating budget A forecast of estimated income, expenses and revenue for a given period of time
Secured bond A debt instrument backed by collateral
Capital expenditure Funds used to acquire or upgrade assets such as land, buildings, machinery and equipment.
Commercial paper Unsecured promissory note issued by a corporation or bank with a short maturity date
Factoring A financing method in which a business sells accounts receivable at a discount to raise funds
Indenture terms An agreement between a lender and borrower that details specific terms of a bond such as maturity date and interest rate
Leverage The degree to which a business uses borrowed money to finance production and growth.
Venture Capital Money provided by private investors to startup firms that are believed to have growth potential
Financial Control The policies and procedures established by an organization for managing, documenting, and reporting costs and expenses
Trade credit An arrangement to buy goods or services on account with payment due at a later date
Financial management Planning, organizing, directing and controlling the financial resources of a firm.
Budget An estimation of revenue and expenses over a specified future time period
Secured loan A loan agreement where assets are pledged by the borrower to decrease the risk for the lender
Finance The business function that involves raising and managing funds.
Capital budget A plan to finance long-term assets such as plant, machinery and equipment
Short-term finance A form of financing with payment due in one year or less
Unsecured loan A loan agreement that is not backed by assets of the borrower
Cash budget A financial plan that summarizes estimated cash receipts and disbursements for a period of time

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