The Financial Environment

The Financial Environment                            

In order to understand the financial environment we must understand the terms financial assets, real assets and marketable securities.

Financial Assets

Financial Assets include cash and bank accounts plus securities and investment accounts that can be readily converted into cash.

It is created only when

Investment>savings (In Real Asset)

Real Asset

Real Assets include houses, buildings, equipment and inventories.

 Security

  Asset(s) pledged by a borrower to ensure repayment of a loan.

  If the borrower defaults, then the lender may sell the security to pay off the loan.

     

     Marketable Securities

  Securities that can be converted into cash quickly at a reasonable price.

  Have maturities of less than one year. 

As from the previous topic

What Should be the goal of the Organization?

We know that the market price of a company’s securities is the real measure of whether the company is a success or a failure.