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Short Term Financial Management: Financial Goals and Short Term Finance

10 Questions

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Short Term Financial Management: Financial Goals and Short Term Finance

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Questions and Answers

What is the main purpose of financial goals?

To focus only on short-term plans

To reach long-term goals only

To spend money without a plan

To achieve financial milestones in earning, saving, investing, and spending (correct)

Which type of financial goal takes less than 3 months to achieve?

Intermediate

Neither Short-Term nor Long-Term

Short-Term (correct)

Long-Term

What is the main characteristic of Short Term Finance?

It involves working capital financing (correct)

It is used for long-term investments

It is focused on long-term liabilities

It takes more than 12 months to repay

What is the main function of Working Capital Management?

To optimize the balance between short-term assets and liabilities Signup and view all the answers

Why is understanding Working Capital Management crucial for businesses?

To have enough cash to meet short-term obligations and fund growth Signup and view all the answers

What does the Working Capital Cycle (WCC) measure?

Time taken to convert net current assets and current liabilities into cash Signup and view all the answers

Which of the following is a source of Short Term Working Capital Financing?

Letter of Credit Signup and view all the answers

What is the purpose of Trade Credit in working capital management?

Provides a floating period to manage cash flow Signup and view all the answers

How can a company reduce its Working Capital Cycle according to the text?

Reducing time taken to convert inventory into sales Signup and view all the answers

Why is short-term financing considered less risky than long-term financing?

Short-term creditors grant credit for a shorter period of time Signup and view all the answers