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Questions and Answers
Financial management is a specialized area of general management that focuses on the finance function within a business.
Financial management is a specialized area of general management that focuses on the finance function within a business.
True (A)
Managerial accounting primarily focuses on recording historical transactions for external reporting purposes.
Managerial accounting primarily focuses on recording historical transactions for external reporting purposes.
False (B)
A credit union is a type of financial institution that is open to the general public for deposits and loans.
A credit union is a type of financial institution that is open to the general public for deposits and loans.
False (B)
Investment banks primarily generate revenue through interest earned on deposits.
Investment banks primarily generate revenue through interest earned on deposits.
A bond represents ownership in a corporation, entitling the holder to a portion of the company's profits.
A bond represents ownership in a corporation, entitling the holder to a portion of the company's profits.
Treasury bills are financial instruments issued by corporations to raise short-term capital.
Treasury bills are financial instruments issued by corporations to raise short-term capital.
Capital markets deal with short-term debts maturing in less than one year.
Capital markets deal with short-term debts maturing in less than one year.
The first step in financial planning is evaluating alternative courses of action.
The first step in financial planning is evaluating alternative courses of action.
A company's mission statement describes what the organization aspires to be in the future.
A company's mission statement describes what the organization aspires to be in the future.
Discount brokerage firms typically provide extensive research and personalized investment advice to their clients.
Discount brokerage firms typically provide extensive research and personalized investment advice to their clients.
Flashcards
Finance
Finance
Providing funds and managing scarce resources.
Financial Management
Financial Management
Managing a business's funds as part of overall management.
Managerial Accounting
Managerial Accounting
Preparing reports for internal use.
Financial Accounting
Financial Accounting
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Financial Institution
Financial Institution
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Commercial Banks
Commercial Banks
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Financial Instrument
Financial Instrument
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Stocks
Stocks
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Bond
Bond
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Capital Markets
Capital Markets
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Study Notes
- Business finance includes public, private, and government entities
- Finance provides funding, exists as a field in business and economics, and involves the allocation of scarce resources
- Financial management is an applied branch of general management and is a finance function of a business
- Financial management involves managing funds, and according to Prof. Solomon, it is an integral part of overall management
- Two types of accounting: managerial (preparation of reports) and financial (historical transactions)
Three Areas of Finances
- Financial institutions handle financial transactions for profit, non-profit, private, and government entities
Kinds
- Depository institutions manage money deposited by individuals
- Non-depository institutions do not handle deposits and serve as intermediaries
Types of Financial Institutions
- Commercial banks accept deposits and provide loans
- Savings and loans, also known as S&Ls, are referred to as residential mortgage lenders
- Credit unions are an offshoot of cooperatives with only members' profit sharing
- Investment banks are intermediaries
- Insurance companies provide a way to manage risk
- Brokerages earn through commission
- Discount brokerage firms allow clients to do research
- Service brokerage firms provide clients advice to help investment portfolios and collect financial products
- Investment companies invest in investment portfolios
Financial Instrument
- A financial instrument is a document that signifies a legally binding agreement and has monetary value
Types of Financial Instruments
- Savings
- Loans
- Bonds can grant loans to others with excess funds or rating
- Security represents ownership of stocks
- Treasury bills are financial instruments issued by the government
Financial Market
- Financial markets are involved in buying & selling stocks and bonds
- Stocks are shares of a corporation
- Bonds are money loaned
Capital Types
- Capital may be short term and or long term debt
- Money represents short term debt
Flow of Funds
- Capital marketers engage in long-term debt maturing in more than 1 year
- Capital marketers take place
Financial Planning
- Financial planning involves tracking and determining how a business can achieve its goals
Financial Planning Steps
- Determine current financial institution
- Develop financial goals
- Identify alternative courses of action
- Evaluate alternatives
- Create & Implement a financial action plan
- Reevaluate and revise the plan
Strategic Plan
- The strategic plan is the grand plan of any organization
Elements of Strategic Plans
- Vision (statement) - what the organization aspires to be
- Mission - organization's core purpose
- Corporate - concrete programs, object strategy, obtein strategy
- Corporate outline specific goals, and a objective
- Department Plans - synonymous with operational plan
- Financial Forecasts & Budgets - they everything together
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