Financial Management Terms

This text provides a brief overview of 10 financial management terms: float, financial engineering, FSN analysis of stock, Gordon model, gross working capital, hire purchase, Hiller Orr model, installment sale, and inventory.

Questions

• What is float?
• What is financial engineering?
• What is FSN analysis of stock?
• What is the Gordon model?
• What is gross working capital?
• What is hire purchase?
• What is the Hiller Orr model?
• What is installment sale?
• What is inventory?

Answers

• Float is the time gap between when a check is written and when the amount is actually debited from the account.
• Financial engineering is the use of complex mathematical models and high-speed computers to solve financial problems.
• FSN analysis of stock is a method of classifying inventory items based on how quickly they move.
• The Gordon model is a dividend valuation model that determines the current market price of a share based on the present value of its future dividends.
• Gross working capital is the total amount of money that a company needs to finance its day-to-day operations.
• Hire purchase is a system of buying goods on credit, with the buyer making regular payments until the full amount is paid off.
• The Hiller Orr model is a model for determining the optimal level of cash in a company.
• Installment sale is a type of sale in which the buyer makes payments over time, with the seller retaining ownership of the goods until the full amount is paid.
• Inventory is the stock of goods that a company has on hand.