About This Chapter
Capital Management Overview - Chapter Summary
If you need a quick recap on capital management, or if you need to learn about this topic from the ground up, this chapter can help. Chapter topics have been divided into short video and text lessons covering accounting terms and definitions, as well as procedures, protocols, and formulas for capital management. After you complete the chapter, you will be ready to do the following:
- Describe sources for short-term and long-term financing
- Identify how to distribute capital within economic systems through financial markets
- Analyze price behavior and capital market efficiency
- Relate the types and roles of financial institutions
- Define how to raise capital through selling stock
- Examine the formula associated with working capital
- Explain disbursements and the control of cash receipts
- Point out the roles of investment bankers in securities markets
- Offer examples of accounts receivable
- Compare cost vs. demand within inventory management
- Show examples of short-term investments
Every lesson we offer has an attached quiz that you can take either before or after you review the lesson. If you are already familiar with these topics, you may decide to take the quizzes before reviewing the lessons, so you can verify how much you already know and identify which areas you need to study more closely. If you are less familiar with capital management, you may decide to take the quizzes after reviewing the lessons as a way to reinforce the concepts you've just learned about.
1. Sources of Long-Term Financing
Some businesses require a large amount of capital to get off the ground or expand. In this lesson, you'll learn about sources of long-term financing, including commercial loans, selling equity and issuing debt.
2. Sources of Short-Term Financing
Companies often need to utilize financing to cover shortfalls in cash flow. In this lesson, you'll learn about sources of short-term financing available to companies including trade credit, lines of credit, bank loans and credit cards.
3. Using Financial Markets to Allocate Capital in Economic Systems
Every company wants to make money, but sometimes it takes money to make even more money. Just like many students use student loans instead of saving for years to go to college, firms have a number of ways to raise capital.
4. Capital Market Efficiency & Price Behavior
Information is a valuable commodity in investing, but in the modern stock market, information is easily available. In this lesson, we will review the efficient market hypothesis and how information availability explains market price behavior.
5. Types of Financial Institutions: Definition, Examples & Roles
In this lesson, we'll explore three types of financial institutions and their roles in financial intermediation. By the end of the lesson, you should also be able to provide an example or two of each type of institution, some of which you may have already used in real life.
6. Selling Stock to Raise Capital
One method a business can use to raise funds is selling stock to potential investors. In this lesson, you'll learn about raising capital through the sale of stock, including its advantages and disadvantages.
7. What Is Working Capital? - Definition & Formula
This lesson explains what working capital is, how it is used in a business, and why businesses need working capital to stay functional. We'll also look at the formula used to calculate working capital.
8. Control of Cash Receipts & Disbursements
Cash is something that we all work hard for and certainly don't want to lose to predators. In this lesson, we will discuss cash and how to protect both the receipt and disbursement of cash.
9. Securities Markets and Investment Bankers
Securities markets and investment banks provide opportunities for companies to obtain capital and people to make investments to increase their wealth. In this lesson, you'll learn about securities markets and the players involved.
10. Accounts Receivable: Definition, Process & Examples
Not all purchases of goods or services are paid for at the time of the purchase. Those that aren't are called accounts receivable. In this lesson, you will learn the basics about accounts receivable.
11. What Is Inventory Management? - Demand vs. Cost
Inventory management is about making sure that there is enough product to meet the demand of the customers. But, what exactly is involved in inventory management? Watch this video lesson to find out.
12. What Are Short-Term Investments? - Definition & Examples
Learn more about short-term investments, their definition, time frames, and associated risk. Find out what defines an asset as liquid and what is classified as a short-term investment.
Earning College Credit
Did you know… We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.
To learn more, visit our Earning Credit Page
Transferring credit to the school of your choice
Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.
Other chapters within the Certified Management Accountant (CMA): Study Guide & Test Prep course
- Financial Statements Overview
- Financial Valuation, Recognition & Measurement
- Financial Strategic Planning
- Budgeting Concepts for Accountants
- Forecasting Techniques in Business
- Budgeting Methodologies in Accounting
- Annual Profit Planning
- Financial Projections
- Cost & Variance Measures in Performance Management
- Responsibility Centers & Reporting Segments
- Performance Measurement in Accounting
- Cost Measurement & Systems
- Overhead Costs
- Understanding Supply Chain Management
- Business Process Improvement
- Governance, Risk & Compliance in Accounting
- Accounting Systems Controls & Security Measures
- Accounting & Enterprise Information Systems
- Data Governance
- Technology-Enabled Finance Transformation
- Data Analytics
- Basic Financial Statement Analysis
- Profitability Analysis
- Financial Statement Special Issues
- Basics of Corporate Finance
- Corporate Restructuring
- International Finance Practices
- Business Decision Analysis
- Risk Management for Business
- Investment Decisions
- Accountant Professional Ethics
- Certified Management Accountant (CMA) Flashcards