BBA SEM 3 Financial Management Fundamentals Quiz
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Questions and Answers

What are the objectives of Financial Management?

  • Maximizing social responsibility and minimizing environmental impact
  • Maximizing market share and maximizing employee satisfaction
  • Maximizing shareholder wealth and maximizing the value of the firm (correct)
  • Maximizing sales and minimizing costs

    • What is the meaning of Working Capital?

  • Long-term assets minus long-term liabilities
  • Current assets minus current liabilities (correct)
  • Total revenue minus total expenses
  • Total assets minus total liabilities

    • What does the ABC system of Inventory Control Techniques entail?

  • Categorizing inventory based on size and controlling large items more closely
  • Categorizing inventory based on age and controlling older items more closely
  • Categorizing inventory based on demand and controlling high-demand items more closely
  • Categorizing inventory based on value and controlling high-value items more closely (correct)

    • What is the difference between traditional and modern approach of Financial Management?

    <p>Traditional approach focuses on profit maximization, while modern approach focuses on wealth maximization</p> Signup and view all the answers

    What are the duties of a Treasurer and Controller?

    <p>Treasurer handles cash management, while Controller manages financial accounting</p> Signup and view all the answers

    What is the meaning of Working Capital?

    <p>It refers to the capital required for day-to-day operations of a business</p> Signup and view all the answers

    What are the objectives of Financial Management?

    <p>Maximizing shareholders' wealth and ensuring the survival of the company</p> Signup and view all the answers

    What is the difference between traditional and modern approach of Financial Management?

    <p>Traditional approach focuses on profit maximization, while modern approach emphasizes wealth maximization</p> Signup and view all the answers

    What are the duties of Treasurer and Controller in financial management?

    <p>Treasurer manages the company's cash and investments, while Controller oversees accounting and financial reporting</p> Signup and view all the answers

    What does Compounding and Discounting refer to with respect to Time value of Money?

    <p>Compounding refers to calculating the future value of money, while Discounting calculates the present value of money</p> Signup and view all the answers

    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.

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    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.

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