food service financial management

financial management
the process of making decisions about assets, the financing of those assets, and the distribution of any potential cash flows generated by the assets
financial accounting
the recording and classifying of financial information for use by others.
types of accounting
financial, managerial, tax, auditing, & cost accounting
financial and managerial accounting focuses on what?
earnings- accrual based earnings.
financial managers and investors are generally more concerned with cash flow, because?
hospitality firms pay employees and suppliers with cash, lenders are repaid with cash, and owners are often paid cash dividends.
why is macro-economics important to financial management?
because of key factors such as interest rates and foreign exchange rates
why is microeconomics related to finance?
because financial managers must understand how individual investors behave the way they do
why is marginal analysis important?
because is an important concept in microeconomics, is often used in financial management to determine if a project’s incremental benefits exceed its incremental costs.
Why is marketing important in financial management? (2 reasons)
1.) marketing projects often involve capital expenditures that require a complete analysis before implementation.
2.) changes in marketing plan can affect the cash flows of a project and must therefore be considered when the evaluation of a potential project in conducted.
sole proprietorship
most common type of business, individuals are in business for themselves.
developed when two or more people form a business
how are preferred stockholders paid?
they are paid before the common stockholder, they have a dividend that is based on the par value of the stock.
a form of debt capital issued by a corporation.
financial management involves 3 major decision of the firm, these are:
investment decisions, financing decisions, dividend decision.
current assets include accounts such as
cash, accounts receivable, and inventory
fixed assets
items such as land, building, and equipment.
things of value that are controlled by the firm
current liabilities
debts owed to others (such as accounts payable and notes payable)
long term liabilities
debts that will take longer than a year to pay ( such as bonds)
owners equity includes
preferred stock, common stock, and retained earnings.
lenders and owners
theses two have claims on the assets, lenders have priority claim (IRS 1st)
goal of financial management
to maximize wealth of owners
3 major factors affecting the value of dividends:
1.) size of dividends
2.) timing of dividends
3.) risk associated with the dividends
in terms of the priority claim on the firm’s cash flow, the owners have the lowest priority and are paid last

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