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2nd Year - 1st Sem (Prelims) > Bridging Prelims > Flashcards

Bridging Prelims Flashcards

1
Q

Primary objectives of FM

A
  1. reduce finance cost
  2. ensure the availability of funds
  3. plan, organize, and control financial activities (Procurement, utilization of funds)
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2
Q

Who do we need to manage finances efficiently?

A

Wants are unlimited but our resources are limited.

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3
Q

FM is the activity concerned with planning, raising, controlling, and administering of funds used in the business

A

Guthman and Dougal

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4
Q

FM is that area of BM devoted to a judicious use of capital

A

J.F. Brandley

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5
Q

FM is the operational activity of a business that is responsible for obtaining and effectively utilizing the funds for efficient operations

A

Massie

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6
Q

Why do organizations need finance?

A

Finance is used to obtain physical resources as well as carry out the production activities and business operations

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7
Q

Theories of FM

A
  1. Providing funds (Procurement of funds)
  2. Finance is all about cash
  3. Procurement of funds and their effective utilization
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8
Q

Scope of FM

A
  1. Financial Decision
  2. Investment Decision
  3. Dividend Decision
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9
Q

What is investment decision?

A

managers need to decide on the amount of investment available out of existing finance

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10
Q

Committing funds for a long period of time. These are decisions that are irreversible.

A

Long-term investment decision or capital budgeting

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11
Q

committing funds for short period of time. They directly affect the liquidity and performance of the busines

A

short-term investment decision or working capital management.

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12
Q

What does Financing Decision mean?

A

decision pertaining to raising finance from long-term sources and short-term sources.

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13
Q

Pre-estimating financial needs of an organization to ensure the availability of adequate finance

A

Financial Planning Decision

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14
Q

Identifying sources of funds as well as involve decisions with respect to external sources or internal sources for raising funds.

A

Capital Structure Decision

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15
Q

Decisions related to the portion of profits that will be distributed as dividend

A

dividend decisions

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16
Q

Financial Services

A

Banking
Personal Financial Planning
Investment
Real Estate
Financial Planning

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17
Q

is the process of developing a personal roadmap for your financial well being.

A

Personal FInancial Planning

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18
Q

an ongoing process that looks at your entire financial picture in order to create strategies for achieving your short and long term goals.

A

Investment

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19
Q

is a branch of finance that focuses on how people purchase real estate, whether that be a home, an office building, or a plot of land.

A

Real Estate

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20
Q

refers to a comprehensive plan of your long term or short term objectives for financial security

A

financial planning

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21
Q

Components of Managerial FInance

A

Financial Analyst
Capital Budgeting Analyst
Cash Manager

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22
Q

works in banks, pension funds, insurance companies, and other businesses. they guide businesses and individuals in decisions about expending money to aattain profit

A

Financial Analyst

23
Q

Summarizes budgets and offer insight regarding funds request. Review budget proposals for completeness, accuracy, and compliance.

A

Capital Budgeting Analyst

24
Q

professional who handles the financial transactions of an organization or client. they monitor and evaluate spending, earnings, risk and oss and works to maximize profits.

A

Cash Manager

25
is a graduate level course of study which is focused largely on the investment side of finance
Chartered Financial Analyst
26
this program requires students to pass a single exam that assesses knowledge and skills needed in working for a corporate treasury dept.
Certified Treasury Professional (CTP)
27
students should pass 10-hour exam covering wide range of topics related to personal financial planning
Certified Financial Planner
28
this administers certification programs for financial professionals in a wide range of fields.
American Academy of Financial Management
29
Types of Professional Certifications in Accounting
Certified Public Accountant Certified Management Accountant Certified Internal Auditor
30
Legal forms of Bus Orgs
Sole Proprietorship Partnership Corporation
31
business owned by one person and operated for one's own profit
sole proprietorship
32
advantage and disadvantage of sole prop
ad: freedom to make all decisions and enjoy profit dis: lack of expertise in running the busines
33
business owned by two or more people and operated for profit
Partnership
34
partnership is based on an agreement called _____
Article of Co-Partnership
35
advantage and disadvantage of partnership
ad: shared talents, brain power, and managerial skills. dis: dissolved when partner withdraws or dies.
36
is an entity created by law. they have the legal power of an individual in that it can sue and be sued, make and be party to contracts, and acquire property in its own name.
corporation
37
advantage and disadvantage of corporation
ad: ease of transferring ownership dis: bound by more government regulations
38
it is a social science that deals with individual or collective economic activities such as production, consumption, distribution, and transfer of money and wealth.
Economics
39
is the study of financial allocation that can provide insights on where to put one's money and why it is necessary
Finance
40
differences between accounting and finance
accountants use accrual method while finance use cash flows
41
__________ recognizes revenue at the point of sale and consider expenses when incurred, regardless of the direction of cash flow in the firm
Accountant/Accounting
42
focuses on actual inflows and outflows of cash, recognizing revenues when cash is collected and considering expenses when actually paid.
Financial Manager/ FInance
43
Decision Rule for Managers
only take actions that are expected to increase the share price
44
Profit maximization may not lead to the highest possible share price due to? 3 reasons
1. timing is important 2. profits do not necessarily result in cash flows available to stockholders 3. profit maximization fails to account for risk
45
2 key activities that Financial Manger does
1. Investment decision - define most efficient level and best structure of assets 2. Financing Decisions - proper combi of shot and long term financing
46
Concerned with the design and delivery of advice and financial products to individuals, businesses and governments.
FINANCIAL SERVICE
47
Concerned with the duties of a Financial Manager working in a business. This encompasses financial planning or budgeting, credit extensions to customers or other credit admin function, investment evaluation and analysis, and obtaining of funds acquisition for a firm.
MANAGERIAL FINANCE
48
is a system rules, practices and processes by which a company is directed and controlled. defines and establishes the responsibility and accountability of the major participants in an organizations
Corporate Governance
49
MAJOR PARTICIPANTS IN AN ORGANIZATION
Shareholders Board of Directors Managers Officers of Corporation
50
refers to implementing appropriate business policies and practices with regard to arguably controversial subjects. The standards of conduct or moral judgement that apply to persons engaged in industry or commerce.
Business Ethics
51
What is the purpose of ethics program in firms?
seek to reduce lawsuits and judgement costs
52
What results to agency problems and issues?
When managers deviate from the goal of maximization of shareholder wealth by putting their personal goals above the goals of shareholders.
53
AGENCY PROBLEM AND ASSOCIATED AGENCY COST CAN BE REDUCED THROUGH THE FOLLOWING:
1. Properly constructed and implemented corporate governance structure - through checks and balances 2. structure expenditures through compensation plans - incentive or performance plans 3. Market Forces Such As Shareholder Crusading From Large Institutional Investors 4. Threat of Hostile Takeovers

2nd Year - 1st Sem (Prelims) (11 decks)

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