BBA SEM 3 Financial Management Fundamentals Quiz

Study Notes

Objectives of Financial Management

Ensure sufficient and optimal use of organizational funds.
Maximize shareholder wealth through effective financial decisions.
Maintain a balance between risk and profitability in investment decisions.
Provide financial information and reports for informed decision-making.
Facilitate the funding of organizational growth and expansion.

Meaning of Working Capital

Refers to the difference between current assets and current liabilities.
Indicates a company's short-term financial health and operational efficiency.
Essential for managing day-to-day operations and maintaining liquidity.
Positive working capital allows for timely payment of obligations.

ABC System of Inventory Control Techniques

Classifies inventory into three categories: A, B, and C based on their importance and value.
A items are high-value goods with lower frequency of sales; require tight control.
B items are moderate value and sales frequency; need regular monitoring.
C items are low-value goods with high sales frequency; easier control with less supervision.

Difference Between Traditional and Modern Approach of Financial Management

Traditional approach focuses on profit maximization and financial planning.
Modern approach emphasizes value creation, stakeholder interests, and long-term sustainability.
Traditional views treat finance as a separate function; modern integrates finance with overall business strategy.
Modern techniques utilize advanced tools and technology for analysis and decision-making.

Duties of a Treasurer and Controller

Treasurer manages the organization’s investments, cash flow, and funding strategies.
Responsible for financial risk management and ensuring liquidity.
Controller oversees accounting operations, financial reporting, and compliance.
Implements internal controls to safeguard assets and ensure accurate reporting.

Compounding and Discounting in Time Value of Money

Compounding refers to the process of calculating future value of an investment based on interest earned over time.
It demonstrates how investments grow over periods through reinvestment of interest.
Discounting determines present value by calculating how much a future sum of money is worth today.
Both concepts illustrate the principle that money has different values at different points in time due to factors like interest rates and inflation.

Description

Test your knowledge of the fundamentals of financial management in the BBA SEM 3 with this frequently asked questions module 1 quiz. Explore topics including executive and routine financial functions, objectives, approaches, classification of finance functions, duties of treasurer and controller, and goals of financial management. Ideal for students seeking to reinforce their understanding of financial management principles.