Financial Decisions and Working Capital Management Quiz

Investment Decisions

• Purchasing buildings, acquiring new machinery, or replacing old machinery are types of investment decisions.
• Investment decisions focus on selecting long-term assets that align with strategic goals.

Financial Management Activity

• Estimating the origins and applications of funds is part of financial planning activities.

Dividend Decisions

• Dividend decisions primarily relate to the distribution of earnings to shareholders.

Capital Structure Decisions

• The main purpose of capital structure decisions is to determine the optimal mix of debt and equity financing.

Working Capital Management

• Working capital management focuses on managing current assets and liabilities to ensure liquidity.

Liquidity and Profitability

• The financial activity that directly impacts a company’s liquidity and profitability is working capital management.

Capital Function in Business

• The main function of capital in a business is to fund operations and facilitate growth.

Financial Management Activities

• Areas not part of financial management activities may include non-financial strategic planning initiatives.

Focus of Investment Decisions

• The main focus of investment decisions for managers is to maximize overall returns on invested capital.

Scope of Financial Management

• Areas outside the scope of financial management might involve purely operational tasks not related to funding.

Capital Budgeting

• The primary focus of capital budgeting is to evaluate potential long-term investments and their profitability.

Capital Allocation Methods

• Methods of capital allocation can include various budgeting techniques, such as net present value (NPV) and internal rate of return (IRR).

Responsibility of Financial Managers

• Financial managers are responsible for managing a company's financial activities and ensuring optimal use of resources.

Financial Planning Activities

• Activities under financial planning include forecasting financial outcomes and planning for future funding needs.

Goals of Investment Decisions

• The primary goal of investment decisions made by financial managers is to enhance shareholder value through profitable investments.

Financing Activities Objective

• The key objective of financing activities in financial management is to obtain funds for operational and investment needs.

Long-term Investment Evaluation

• The process of evaluating and selecting long-term investments that align with a firm's strategic goals is known as capital budgeting.

Test your knowledge on financial decisions involving the purchase of assets and working capital management. Learn about the impact of these decisions on a company's financial goals and results.