Financial Management Fundamentals
51 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the role of financial management?

Planning for a firm's money needs and managing the allocation and spending of funds.

What are the three fundamental concepts of financial management?

  • Balancing short-term and long-term demands
  • Balancing potential risks and rewards
  • Balancing leverage and flexibility
  • All of the above (correct)

    • What is a financial plan?

    A document that outlines the funds needed for a certain period of time.

    Internal sources of funding include revenue from sales, investment income, and revenue selling assets.

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

    Which of the following are external sources of funding?

    <p>All of the above (F)</p> Signup and view all the answers

    What is a strategic plan?

    <p>It defines goals, objectives, and priorities.</p> Signup and view all the answers

    What are the different types of budgets?

    <p>All of the above (E)</p> Signup and view all the answers

    What is the primary function of financial control?

    <p>To analyze and adjust the basic financial plan to correct for deviations from forecasted events.</p> Signup and view all the answers

    Hedging is a strategy for protecting against cost increases by securing contracts for future supplies at predetermined prices.

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

    What is zero-based budgeting?

    <p>Departments start from zero every year and must justify every item in the budget.</p> Signup and view all the answers

    What are the three major challenges in budgeting?

    <p>All of the above (D)</p> Signup and view all the answers

    What is the purpose of a start-up budget?

    <p>To identify the funds needed to launch operations for a new company.</p> Signup and view all the answers

    What is an operating budget?

    <p>It identifies all sources of revenue and coordinates the spending of those funds throughout the coming year, sometimes known as the master budget.</p> Signup and view all the answers

    What is a capital budget?

    <p>It outlines expenditures for real estate, new facilities, major equipment, and other capital investments.</p> Signup and view all the answers

    What is a project budget?

    <p>It identifies the costs needed to accomplish a particular project.</p> Signup and view all the answers

    What are the two main types of financing?

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

    What is debt financing?

    <p>Arranging funds by borrowing money.</p> Signup and view all the answers

    Match the characteristics to the appropriate financing type:

    <p>Debt = Specific maturity, non-discretionary cost, priority claim on assets, usually little influence on management, tax deductible, no employee benefit. Equity = No maturity, discretionary cost, residual claim on assets, varies influence on management, not tax deductible, stock options</p> Signup and view all the answers

    What are the two types of financing based on the length of term?

    <p>Both A and B (C)</p> Signup and view all the answers

    What is short-term financing?

    <p>Repaid within one year and used to cover current expenses.</p> Signup and view all the answers

    What is the prime interest rate?

    <p>The lowest interest rate offered on short-term bank loans to preferred borrowers.</p> Signup and view all the answers

    What is opportunity cost?

    <p>The technique of increasing the rate of return on an investment by financing it with borrowed funds.</p> Signup and view all the answers

    What is capital structure?

    <p>A firm's mix of debt and equity financing.</p> Signup and view all the answers

    What is trade credit?

    <p>Occurs when suppliers provide goods and services to their customers without requiring immediate payment.</p> Signup and view all the answers

    What are secured loans?

    <p>Loans backed up with assets that the lender can claim in case of default.</p> Signup and view all the answers

    What is a compensating balance?

    <p>A minimum amount of money a borrower must maintain on deposit at the bank.</p> Signup and view all the answers

    What is a line of credit?

    <p>It is a pre-arranged agreement where a bank agrees to lend a business a maximum amount of money.</p> Signup and view all the answers

    What is commercial paper?

    <p>A short-term debt security issued by corporations to raise funds for working capital purposes.</p> Signup and view all the answers

    What is a lease?

    <p>An agreement to use an asset in exchange for regular payments.</p> Signup and view all the answers

    What are corporate bonds?

    <p>Debt securities issued by companies to raise long-term capital.</p> Signup and view all the answers

    What are debentures?

    <p>Unsecured bonds that are not backed by any specific assets.</p> Signup and view all the answers

    What are convertible bonds?

    <p>Bonds that can be converted into shares of common stock under certain conditions.</p> Signup and view all the answers

    What is private equity?

    <p>Ownership assets that aren't publicly traded, including venture capital.</p> Signup and view all the answers

    What is an underwriter?

    <p>A specialized type of bank that buys shares from the company preparing an IPO and sells them to investors.</p> Signup and view all the answers

    What is a prospectus?

    <p>A document that provides detailed information about a company's financial condition and business operations to potential investors.</p> Signup and view all the answers

    Jika syarikat mengalami kebankrapan, siapa yang akan menerima bayaran terlebih dahulu?

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

    Pemegang saham mempunyai pengaruh yang sedikit atau tiada langsung dalam pengurusan syarikat.

    <p>False (B)</p> Signup and view all the answers

    Apakah satu kelebihan hutang dari segi cukai yang tidak dimiliki oleh ekuiti?

    <p>Bayaran hutang boleh ditolak cukai</p> Signup and view all the answers

    Sebuah syarikat boleh mengeluarkan _________ kepada pekerja sebagai insentif atau ganjaran.

    <p>saham</p> Signup and view all the answers

    Padankan jenis pembiayaan dengan tempoh pembayarannya:

    <p>Pembiayaan Jangka Pendek = Dibayar dalam masa 1 tahun atau kurang Pembiayaan Jangka Panjang = Dibayar dalam masa lebih dari 1 tahun</p> Signup and view all the answers

    Apakah yang dimaksudkan dengan 'kadar faedah utama'?

    <p>Kadar faedah terendah untuk pelanggan istimewa bank (A)</p> Signup and view all the answers

    Antara berikut, yang manakah contoh modal kerja?

    <p>Inventori dan akaun belum terima (C)</p> Signup and view all the answers

    Struktur modal merujuk kepada kombinasi hutang dan ekuiti yang digunakan oleh syarikat

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

    Dalam pengurusan kewangan, risiko yang lebih tinggi selalu menjamin keuntungan yang lebih tinggi.

    <p>False (B)</p> Signup and view all the answers

    Dalam pembiayaan jangka pendek, ___________ memerlukan syarikat menyimpan wang untuk syarat-syarat pinjaman tertentu.

    <p>baki pampasan</p> Signup and view all the answers

    Apakah tujuan hedging dalam pengurusan kewangan?

    <p>Untuk mengelakkan kenaikan harga barang melalui kontrak tetap.</p> Signup and view all the answers

    Pinjaman adalah contoh pembiayaan berjenis ______.

    <p>hutang</p> Signup and view all the answers

    Padankan jenis bajet dengan kegunaannya:

    <p>Bajet Permulaan = Untuk memulakan perniagaan Bajet Operasi = Untuk menjalankan perniagaan harian Bajet Modal = Untuk membeli aset besar seperti tanah dan mesin Bajet Projek = Untuk sesuatu projek khas</p> Signup and view all the answers

    Pernyataan manakah yang menerangkan fleksibiliti dalam pengurusan kewangan?

    <p>Mampu mengubah strategi kewangan mengikut keadaan (C)</p> Signup and view all the answers

    Ekuiti memberikan tuntutan wajib pada pendapatan syarikat, seperti hutang.

    <p>False (B)</p> Signup and view all the answers

    Apakah yang dimaksudkan dengan bajet asas nol?

    <p>Semua perbelanjaan mesti dibenarkan setiap tahun.</p> Signup and view all the answers

    Study Notes

    Financial Management

    • Financial management involves planning for a firm's financial needs and allocating funds effectively.
    • Risk and reward potential are balanced considerations.
    • Short-term and long-term financial needs must be balanced. Must have ready cash to pay for salaries, bills and taxes in addition to strategic long-term investments.
    • Risk and reward are fundamental concepts in every financial decision. Every decision involves a risk/reward trade-off. Higher risk may lead to higher rewards.
    • Leverage and flexibility must also be considered. Debt can be a tool or a trap.

    Financial Planning

    • Financial plans outline required funds for a specified period.
    • Internal sources include revenue from sales, investment income, and asset sales. Internal sources also include revenue from selling assets such as shares.
    • External sources include credit cards, loans, trade credit, commercial paper, and equity.
    • Strategic goals, objectives, and priorities are essential elements of a strong financial plan. Financial plans include outlining funds needed for a specific period and finding/allocating these funds.

    Budgets

    • Budgets identify the amount and type of capital needed, when and where funds will be spent.
    • Budgets include start-up, operating, capital, and project budgets. Operating budgets define cash requirements and current spending needs. Capital budgets plan for major investments. Project budgets plan and allocate funds for specific projects
    • Budgets are crucial for planning spending, monitoring cash flow, and ensuring profitability.
    • The budgeting process includes projecting expected revenue and expenses. A budget is a planning and controlling tool that reflects projected revenues and expenses.

    Managing Accounts

    • Accounts receivable and payable management are important components of effective cash flow management.
    • Accounts receivable represent amounts owed to the firm. Amounts owned to the firm are managed effectively through accounts receivable.
    • Accounts payable represent amounts owed by the firm. Amounts owed by the firm are managed through accounts payable.
    • Monitoring working capital is crucial in this aspect, representing the firm's economic value from cash on hand and accounts. Monitoring working capital represents the firm's cash on hand and accounts.

    Financing Alternatives

    • Trade credit involves suppliers providing goods/services without immediate payment.
    • Secured loans are backed by assets.
    • Unsecured loans are based on creditworthiness.
    • Compensating balances are minimum amounts maintained in bank accounts.
    • Lines of credit are maximum loan amounts.
    • Commercial paper is a short-term debt instrument.
    • Long-term loans cover funds for extended periods.
    • Leases are agreements for using assets.
    • Corporate bonds are long-term debt instruments backed by the company.
    • Private equity investment involves purchasing shares that are not traded publicly. Equity, debt, and private equity financing alternatives exist.

    Public Stock Offerings

    • Underwriters are specialized banks that purchase shares in IPOs to sell them to investors.
    • Prospectuses are documents containing information about the potential investment. IPO (Initial Public Offering).

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Related Documents

    Financial Management BOM Note PDF

    Description

    This quiz covers the key concepts in financial management, including capital allocation, risk assessment, and financial planning. Participants will explore both internal and external funding sources and the importance of budgets in achieving financial goals. Test your understanding of how to balance short-term and long-term financial needs effectively.

    More Like This

    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser