Business Finance 1st Quarter (Periodical)

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Questions and Answers

Which of the following attributes is NOT mentioned as an attribute of competent managers?

  • Decisive
  • Innovative (correct)
  • Visionary
  • People-oriented

What is the role of financial management according to the text?

  • To maximize the value of shareholders' wealth
  • To make decisions that maximize the market's perception of the company
  • To maximize the value of shares of stocks (correct)
  • To make decisions that influence the share price

Which of the following is NOT an uncontrollable or external factor mentioned in the text?

  • Flow of foreign funds invested in the Philippine stock market
  • Prospects of the industry (correct)
  • General market sentiment
  • Economic conditions

According to the text, what should business owners do to appeal to customers?

<p>Make their product of good quality (C)</p> Signup and view all the answers

What is the goal of financial management according to the text?

<p>To maximize the value of shareholders' wealth (B)</p> Signup and view all the answers

Which of the following attributes is NOT mentioned as an attribute of competent managers?

<p>Analytical (C)</p> Signup and view all the answers

What does financial management aim to maximize according to the text?

<p>Shareholders' wealth (C)</p> Signup and view all the answers

Which of the following is an uncontrollable or external factor mentioned in the text?

<p>Economic conditions (D)</p> Signup and view all the answers

What should business owners do to appeal to customers according to the text?

<p>Improve product quality (A)</p> Signup and view all the answers

What do economic conditions refer to according to the text?

<p>State of the economy (D)</p> Signup and view all the answers

Which of the following attributes is NOT mentioned as an attribute of competent managers?

<p>Goal-oriented (A)</p> Signup and view all the answers

What is the goal of financial management according to the text?

<p>Maximize the value of shareholders' wealth (A)</p> Signup and view all the answers

What do economic conditions refer to according to the text?

<p>The present state of the economy in a country or region (C)</p> Signup and view all the answers

What should business owners do to appeal to customers according to the text?

<p>Make their product of good quality (D)</p> Signup and view all the answers

Which of the following is an uncontrollable or external factor mentioned in the text?

<p>Economic conditions (C)</p> Signup and view all the answers

Which of the following is true about preferred stockholders?

<p>They have priority over common stockholders in terms of claims over company assets. (B)</p> Signup and view all the answers

What is the main difference between primary and secondary markets?

<p>Primary markets involve the issuance of new securities, while secondary markets involve the trading of pre-owned securities. (A)</p> Signup and view all the answers

What is the main function of commercial banks?

<p>To provide commercial loans to firms and personal loans to individuals. (C)</p> Signup and view all the answers

What is the main function of mutual funds?

<p>To enable small investors to enjoy the benefits of investing in a diversified portfolio of securities. (C)</p> Signup and view all the answers

What is the main function of pension funds?

<p>To receive payments from employees and invest the proceeds on their behalf. (D)</p> Signup and view all the answers

Which of the following is true about preferred stockholders?

<p>Preferred stockholders have priority over common stockholders in terms of claims over the assets of a company. (A)</p> Signup and view all the answers

What is the main function of commercial banks?

<p>To provide commercial loans to firms and personal loans to individuals. (C)</p> Signup and view all the answers

What is the main difference between primary and secondary markets?

<p>Primary markets involve the issuance of new securities, while secondary markets involve the trading of pre-owned securities. (B)</p> Signup and view all the answers

What is the main function of pension funds?

<p>To receive payments from employees and invest the proceeds on their behalf. (D)</p> Signup and view all the answers

What is the main goal of financial management according to the text?

<p>To maximize the return on investment for shareholders. (B)</p> Signup and view all the answers

Which of the following statements about preferred stockholders is true?

<p>Preferred stockholders have priority over common stockholders in the distribution of assets during liquidation. (A)</p> Signup and view all the answers

What is the main function of insurance companies?

<p>To pool insurance premiums and invest the proceeds in various securities. (C)</p> Signup and view all the answers

What is the main goal of mutual funds?

<p>To enable small investors to enjoy the benefits of investing in a diversified portfolio of securities. (A)</p> Signup and view all the answers

What is the main function of pension funds?

<p>To receive payments from employees and invest the proceeds on their behalf. (A)</p> Signup and view all the answers

What is the main difference between primary and secondary markets?

<p>Primary markets involve the issuance of new securities, while secondary markets involve the trading of pre-owned securities. (D)</p> Signup and view all the answers

Which vice president is responsible for formulating marketing strategies and plans?

<p>VP for Marketing (D)</p> Signup and view all the answers

What is one of the responsibilities of the VP for Production?

<p>Ensuring production meets customer demands (B)</p> Signup and view all the answers

What is one of the functions of the VP for Finance?

<p>Financing (A)</p> Signup and view all the answers

What is the role of a financial manager in relation to cash dividends?

<p>Determining when the company should declare cash dividends (D)</p> Signup and view all the answers

What must exist for a company to be able to declare cash dividends?

<p>Enough retained earnings and cash (C)</p> Signup and view all the answers

Which vice president is responsible for coordinating the functions of administration, finance, and marketing departments?

<p>VP for Administration (A)</p> Signup and view all the answers

What is one of the responsibilities of the VP for Production?

<p>Ensuring production meets customer demands (A)</p> Signup and view all the answers

What is the main function of the VP for Finance?

<p>Making decisions on how to fund long term investment and working capital (A)</p> Signup and view all the answers

What is one of the responsibilities of the VP for Marketing?

<p>Performing market and competitor analysis (A)</p> Signup and view all the answers

What must exist for a company to be able to declare cash dividends?

<p>The company must have enough retained earnings (B)</p> Signup and view all the answers

Which vice president is responsible for coordinating the functions of administration, finance, and marketing departments?

<p>VP for Administration (D)</p> Signup and view all the answers

Which vice president is responsible for formulating marketing strategies and plans?

<p>VP for Marketing (C)</p> Signup and view all the answers

What is the main function of insurance companies?

<p>Making decisions on how to fund long term investment and working capital (B)</p> Signup and view all the answers

What is the goal of financial management according to the text?

<p>Maximizing the utilization of the company’s production facilities (D)</p> Signup and view all the answers

What must exist for a company to be able to declare cash dividends?

<p>Enough retained earnings and cash (C)</p> Signup and view all the answers

Flashcards

Financial Management Goal

Maximizing shareholder wealth and ensuring financial stability.

Financial Management Strategy

Creating long-term value through good financial planning and resource use.

Cash Dividend Declaration

A company must have enough saved money and meet other financial conditions to pay dividends.

Competent Manager Attributes

Good decision-making, leadership, and communication skills are essential.

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Economic Conditions Impact

External factors like inflation, jobs, and growth affect business.

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Customer-Focused Strategy

Understanding and meeting customer needs makes for satisfied customers.

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Uncontrollable Business Factors

Economic changes, competitors, and rules.

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Preferred Stockholders

Get dividends before common stock owners but usually have no voting rights.

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Primary Market

Where new securities (stocks, bonds) are sold for the first time.

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Secondary Market

Where existing securities are traded.

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Commercial Bank Function

Provides loans and helps people and businesses with everyday finances.

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Mutual Fund Goal

Investors' money is combined to buy various stocks and bonds for growth and income.

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Pension Fund Function

Collects retirement funds and pays out income to people later.

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Insurance Company Function

Protects people and businesses in case of unexpected events.

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VP of Finance Role

Oversees the company's financial operations.

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VP of Production Role

Manages production processes and efficiency.

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VP of Marketing Role

Develops and carries out marketing strategies.

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VP Coordination

Different VPs must work together to achieve shared objectives.

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Cash Dividend Requirement

Companies need enough profit to pay dividends.

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Study Notes

Financial Management

  • Financial management aims to maximize shareholder wealth and ensure a company's financial stability.
  • The goal of financial management is creating long-term value through prudent financial planning and effective resource allocation.
  • To declare cash dividends, a company must have sufficient retained earnings and meet other financial criteria.

Competent Managers

  • Competent managers possess critical attributes such as decision-making ability, leadership skills, and effective communication.
  • Certain attributes are mentioned as essential for competent managers, while others may not be included.

Economic Conditions

  • Economic conditions refer to external factors that influence business operations, such as inflation rates, employment levels, and economic growth.

Business Strategies

  • Business owners should focus on understanding customer needs and preferences, tailoring offerings to enhance customer satisfaction.

Uncontrollable Factors

  • Uncontrollable external factors include economic conditions, competitors, and regulatory changes that impact business operations.

Financial Instruments and Institutions

  • Preferred stockholders have priority over common stockholders in dividend payments but do not typically have voting rights.
  • The primary market is where new securities are issued and sold, while the secondary market is for trading existing securities.

Functions of Financial Entities

  • Commercial banks primarily provide loans and safekeeping for deposits, facilitating everyday financial transactions.
  • Mutual funds pool investors' money to purchase diversified portfolios of stocks and bonds aiming for capital appreciation and income.
  • Pension funds manage retirement savings to provide income for beneficiaries upon retirement.
  • Insurance companies primarily underwrite risk and provide financial protection against unforeseen events.

Management Roles

  • The Vice President for Finance oversees the financial operations and strategies within a company.
  • The VP for Production is responsible for overseeing the production processes and ensuring efficiency in manufacturing.
  • The VP for Marketing formulates and implements marketing strategies to enhance brand awareness and drive sales.
  • A VP must coordinate various departments (administration, finance, marketing) to ensure aligned objectives and effective communication.

Cash Dividends

  • A company must have enough profit and retained earnings to declare cash dividends, reflecting its financial health and capacity to return capital to shareholders.

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