Questions and Answers
What is the primary aim of financial management?
Which of the following is an example of a tangible asset?
According to B.O. Wheeler, what does business finance primarily concern?
What determines eligibility for many financial opportunities, including loans?
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What is a recommended strategy to avoid damaging credit?
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What is a key component of successful credit management for first-time entrepreneurs?
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What should a company budget present?
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Which action is essential for companies to survive financially?
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Study Notes
Financial Management
- Financial management involves optimizing the use of limited financial resources to achieve organizational goals, as resources are always limited but wants are unlimited.
Purpose of Finance
- Finance is necessary for acquiring various assets, including:
- Tangible assets (e.g., machinery, factories, buildings)
- Intangible assets (e.g., trademarks, patents)
Definition of Business Finance
- Business finance refers to activities concerned with acquiring and conserving capital funds to meet financial needs and overall business objectives (according to B.O. Wheeler).
Understanding Credit
- Credit is a vital financial concept for business success.
- A good credit rating determines eligibility for financial opportunities, including loans.
- Credit is an abstract representation of financial responsibility, and it's essential to maintain a strong credit score.
- Building credit takes time, especially for first-time entrepreneurs with limited financial history.
- Strategies for building credit include:
- Consistent credit management
- Avoiding errors that could damage credit
- Monitoring credit scores regularly
- Setting up auto-pay for bills to avoid late payments
- Avoiding ventures with high interest rates
- Alternative options for obtaining capital exist for those without ideal credit ratings.
Learning How to Budget
- A company budget should provide a comprehensive picture of finances.
- Accurate and regular financial record-keeping is crucial for business survival.
- Companies should:
- Keep accurate financial records
- Review financial records regularly
- Ensure complete financial transparency.
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Description
This quiz covers the basics of financial management, purpose of finance, and definition of business finance for first-year BCom entrepreneurship students at Thakur College of Science and Commerce, Mumbai.
