F.Y.Bcom Entrepreneurship: Financial Management

Questions and Answers

Overcoming external competition

Managing limited financial resources effectively (correct)

Expanding the market reach

Diversifying investment portfolios

Tangible, like raw materials and intangible, like services

Tangible, like machinery and intangible, like trademarks (correct)

Only intangible, like patents and software

Only tangible, like machinery and buildings

Acquisition and conservation of capital funds (correct)

Investing in high-risk ventures

Maximizing profit margins and reducing debts

Innovating new product lines

It helps determine eligibility for financial opportunities Signup and view all the answers

Building credit consistently and avoiding errors Signup and view all the answers

Reviewing financial records regularly Signup and view all the answers

Due to a lack of financial history or weak credit Signup and view all the answers

To prevent late payments and maintain strong credit Signup and view all the answers

Study Notes

Financial management involves optimizing the use of limited financial resources to achieve organizational goals, as resources are always limited but wants are unlimited.

Finance is necessary for acquiring various assets, including:
- Tangible assets (e.g., machinery, factories, buildings)
- Intangible assets (e.g., trademarks, patents)

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).

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.

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.