1. © 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 16 | Slide 1 Chapter 16: Mastering Financial Management

2. © 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 16 | Slide 2 Learning Objectives 1. Explain the need for financial management in business. 2. Summarize the process of planning for financial management. 3. Identify the services provided by banks and financial institutions for their business customers. 4. Describe the advantages and disadvantages of different methods of short-term debt financing. 5. Evaluate the advantages and disadvantages of equity financing. 6. Evaluate the advantages and disadvantages of long-term debt financing.

3. © 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 16 | Slide 3  The Need for Financing 1. Short-Term Financing 2. Long-Term Financing  The Need for Financial Management 1. Financial Management During the Economic Crisis 2. Financial Reform After the Economic Crisis 3. The Risk-Return Ratio  Careers in Finance What Is Financial Management?

4. © 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 16 | Slide 4  Developing the Financial Plan 1. Establishing Organizational Goals 2. Budgeting for Financial Needs 3. Identifying Sources of Funds  Monitoring and Evaluating Financial Performance Planning—The Basis of Sound Financial Management

5. © 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 16 | Slide 5  Traditional Banking Services for Business Clients 1. Savings and Checking Accounts 2. Business Loans  Why Has the Use of Credit Transactions Increased?  Electronic Banking Services  International Banking Services Financial Services Provided by Banks and Other Financial Institutions

6. © 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 16 | Slide 6  Sources of Unsecured Short-Term Financing 1. Trade Credit 2. Promissory Notes Issued to Suppliers 3. Unsecured Bank Loans 4. Commercial Paper  Sources of Secured Short-Term Financing 1. Loans Secured by Inventory 2. Loans Secured by Receivables  Factoring Accounts Receivable  Cost Comparisons Sources of Short-Term Debt Financing

7. © 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 16 | Slide 7  Selling Stock 1. Initial Public Offering and the Primary Market 2. The Secondary Market 3. Common Stock 4. Preferred Stock  Retained Earnings  Venture Capital and Private Placements Sources of Equity Financing

8. © 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 16 | Slide 8  Long-Term Loans 1. Term-Loan Agreements 2. The Basics of Getting a Loan  Corporate Bonds 1. Types of Bonds 2. Repayment Provisions for Corporate Bonds  Cost Comparisons Sources of Long-Term Debt Financing