İntroduction to Business 2 BUS 102 Erlan Bakiev, Ph. D. Zirve University BUS 102

Financial Management and Banking

Role of Financial Management Rent and Utilities Plant and Equipment Materials Advertising-Promotions Distribution Wages, Salaries, Training Interest, Dividends, Taxes Sales from Operations Sales from Assets Retained Earnings Trade Credit Bonds Stocks Commercial Loans Management Decides How To Use Funds

Implementing the Financial Plan Cash Flow Cash Reserves Electronic Cash ManagementMarketableSecuritiesInventoryControlAccountsReceivable and Payable

Operating Budget Revenues Expenses Cash Flows Master Budget Master Budget Financial Control Cost ControlExpenditures Plan for the Future

Request Review Evaluate Recommend Capital Budget Process

Financing Operations and Growth Length of Term Cost of Capital Debt or Equity

Length of Term Short-Term FinancingLong-Term Financing Time Frame More Than One Year Less Than One Year Maintain Liquidity Meet Obligations Acquire Assets Fund Growth

Long-Term Loans Leasing Bonds Preferred Stock Common Stock Sale of Assets Retained Earnings Internal Sources Internal Sources Debt Capital Equity Capital External Sources External Sources Long-Term Projects Long-Term Projects Long-Term Financing Long-Term Financing click above title for web link click above title for web link

Cost of Capital Company Risk Opportunity Cost Interest Rates Quality Time Prime Rate Discount Rate Discount Rate Leverage Capital Structure Capital Structure

CharacteristicDebtEquity MaturitySpecificNonspecific Claim on IncomeFixed CostDiscretionary Cost Claim on AssetsPriorityResidual Influence Over Management LittleVariable Debt versus Equity

Open Account Purchases Short-Term Promissory Note Secured or Unsecured Owner Rents Asset To User Obligation of Repayment Plus Interest Trade Credit Commercial Paper LoansLeasesBonds Types of Debt Financing

Critical Thinking 1.What are some of the risks of failing to create and manage budgets? İdentify as many as you can think of. 2.Does it ever make sense for a profitable company with positive cash flow to seek external financing (through either debt or equity)? Why or why not? 3.What factors might lead a company to gain additional funds through debt financing rather equity financing?

The U.S. Financial System Deposit  Commercial banks  Savings and loans  Mutual savings banks  Credit unions Nondeposit  Insurance companies  Pension funds  Finance companies  Brokerage firms

Checking and Savings Credit, Debit, and Smart Cards Financial Services Business Loans On-Line Payments and Electronic Banking

Checking and Savings Accounts Checking AccountSavings AccountDeposit Account Demand Deposit Accounts Statement Savings Accounts Money Market and CDs

Business Loans Expansion Construction Purchases Renovation

Short-Term Credit Credit Cards Debit Cards Smart Cards

Online Payment Systems AdvantagesDisadvantages Security of Personal Information Ease of Making Payments Easy to Set Up Account Maintenance Issues Software Problems Consumer Protection Issues

Electronic Banking AutomatedTellerElectronic Funds Transfer OnlineBanking

Bank Safety and Regulation Federal Deposit Insurance Corporation National Credit Union Association State Banking Commission Office of the Comptroller of the Currency Office of Thrift Supervision Federal Reserve System

The Future of Banking Industry Competition Banking Ethics Crime and Terrorism

Critical Thinking 1.Why should a company choose the direct deposit method for paying its employees? 2.Do banks have an ethical responsibility to find out if their customers are using bank services to support criminal activity? Why or why not?

The Federal Reserve System Conducting Monetary Policy Stabilizing the Banking System Stabilizing the Economy Clearing Checks

Durable Portable Medium of Exchange Medium Measure of Value Measure Store Store Stable Divisible What is Money?

U.S. Money Supply Hard Currency Demand Deposits Time Deposits

Measuring the Money Supply

Influencing the Money Supply DecreaseIncrease LowerRaise BuySell Reserve Requirements Discount Rate Open-Market Operations Selective Credit Controls Fewer More To Increase Money Supply To Decrease Money Supply

Federal Reserve Functions SupplyingCurrency ClearingChecks