Why A Firm Fail Financially

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Three of the most common reasons a firm fails financially
1. Undercapitalization 资金不足
2. poor control over cash flow 现金流控制不加
3. inadequate expense control 费用控制不当

Financial planning 使公司利益最大化, 最好的使用錢
1. forecasting the firm’s short-term and long-term financial needs
預測短期和長期的資金需求
2. developing budgets to meet those needs
編制能夠滿足需求的預算
3. establishing financial controls to see whether the company is achieving its goals 建立財務控制機制以檢視公司運營情況

Three types of budgets
1. A capital budget 資本預算 – major asset purchases (large sums of money) 比如大樓和設備
2. A cash budget 現金預算 – cash flows 現金流動
3. An operating or master budget 運營預算 – 公司的整體運作預算

Operating funds 在哪些地方需要資金
1. Managing day-by-day needs of the business 管理日常的運營支出 – money has a time value 2. Controlling credit operations 控制信貸業務 – 賒銷要先為顧客墊付 3. Acquiring needed inventory 購置所需存貨 – 控制好存貨量 4. Making capital expenditures 資本支出 – 有形的長期投資或者無期資產 (買擴充用的土地廠房新設備等)
Short term financing – 短期的資金來源
1. trade credit – buying goods or service now and paying later 2/10, 30 十天以內還錢可以打8折, 有效期是30天
2. family and friends
3. commercial banks – offer different types of short-term loans a secured loan : collateral 擔保貸款, 有擔保品, 這個過程叫做pledging 保證, 抵押 unsecured loan line of credit: unsecured short term funds, provided at any time if available revolving credit agreement: provided at any time, but high fee
4. commercial finance companies – higher interest rate
5. factoring accounts receivable – selling accounts receivable for cash
6. commercial paper 商業票據 – unsecured
7. credit card – high interest

Long term financing – 長期的資金來源
1. Debit financing 債務融資 borrowing from lending institutions
Issuing bonds - sell bonds to investor (federal, state and local governments)
2. Equity financing 股權融資 selling stock 出售股票 retained earnings 使用預備資金 venture capital 風險投資, 投資覺得有潛力的新興產業 Five standard for money
1. portability 可攜帶
2. divisibility
3. stability
4. durability 耐久
5. uniqueness

M1 – money that can be accessed quickly and easily, included coins and paper bills

M2 – money included in M1 plus savings account, take a little more time to obtain

M3 – money included in M3 plus big deposits

Federal Reserve System consists of five major parts
1. the board of governors
2. the Federal Open Market Committee (FOMC)
3. 12 Federal Reserve banks
4. Three advisory councils
5. The member banks of the system

How Fed uses to manage the money supply
1. the reserve requirement – percentage of commercial banks’ checking and savings accounts must keep in the bank 銀行固定要儲存多少錢
2. open-market operations – buying and selling of government bonds 購買或者銷售政府的債卷
3. the discount rate – interest rate the Fed charges for loans to member banks 降低利息
為了提高資金提供, 政府可以剪掉reserve requirement, 購買政府債卷還有降低discount rate

Commercial Banks
1. checking account – demand deposit
2. saving account – time deposit
3. certificate of deposit (CD) – savings account that earns interest, to be delivered on the certificate’s maturity date

Where to borrow money
1. Commercial banks - savings account, checking account 一般銀行的服務
2. Savings and Loan associations (S&Ls) – thrift institutions, home mortgage loans 現在和commercial banks服務差不多
3. Credit unions – non-profit 做一切銀行可以做的事, 有時候利息比較高
4. Life insurance companies –
5. TIAA-CREF – provide retirement and health benefits
6. Brokerage firms
7. Commercial and consumer finance companies

How to protect your money
1. The Federal Deposit Insurance Corporation (FDIC) – 由政府保護, 銀行破產的話自動轉到別的銀行, 其他沒有影響
2. The Savings Association Insurance Fund (SAIF) – 在FDIC下的一個機構
3. The National Credit Union Administration (NCUA)

Five key working areas of accounting
1. Managerial accounting – 管理會計 provide information and analysis for people inside the organization to make decision
2. Financial accounting – 財務會計 for people outside the organization
3. Auditing 審計
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