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Introduction Of Philosophy > Business Finance > Flashcards

Business Finance Flashcards

1
Q

The four functions of a VP for finance (CFO)are as follows

A

Financing
Investing
Operating
Dividend policies

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2
Q

Financing decision
(Day by day operation of the company)

A

Financing decision include making decisions on how to fund long term investments and working capital which deals with a day by day operation of the company

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3
Q

Investments

A

Investing is where you put your access cash to make it more profitable

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4
Q

Short term investment

A

Decisions is needed when the company is an excess cash position.

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5
Q

Long term investment

A

Should be supported by a capital budgeting analysis which is among responsibilities of a finance manager.

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6
Q

Operating decisions (receivable and inventories)

A

Deal with the daily operation of the company. The role of the VP For finance is to determine how to finance to finance working capital accounts such as accounts receivable and inventories

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7
Q

Short term sources (will be payble in at most 12 months)

A

Are those that will be payable in at most 12 months. is generally lower compared to that long term loans

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8
Q

Long term sources

A

On the other hand mature in longer periods since this will be paid much later the lender expect more risk and place a higher interest rate which makes the cost of a long term sources sources higher than short term sources

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9
Q

Dividend policies

A

Cash dividends are paid by the corporations to existing shareholdings in the company as a return on their investment

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10
Q

Finance (science)

A

Fiance can be defined as the science and art of managing money

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11
Q

Finance decisions

A

How and where to will use money

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12
Q

Budgeting (period of time)

A

Budgeting is the act of estimating revenue and expenses over a period of time

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13
Q

Source of funds

A

the origin of the particular funds or any other monetary instrument which are the subject of the transaction between a Financial Institution and the customer

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14
Q

Financial System(lendader and the borrower)

A

The financial system is an organized and regulated structure where an exchange of funds takes place between the lender and the borrower.

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15
Q

Financial system

A

This is diagram of a financial system the solid lines represent of the flow of cash/funds while the broken lines present the flow of financial instruments which represent obligation to transfer cash or other asset in the future

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16
Q

Financial Market

A

Are organized forums in which the suppliers and users of various types of funds can make transactions directly.

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17
Q

Private Placements

A

Private placement (or non-public offering) is a funding round of securities which are sold not through a public offering, but rather through a private offering, mostly to a small number of chosen investors. Generally, these investors include friends and family, accredited investors, and institutional investors.

18
Q

Types of financial market

A

Primary markets
Secondary markets
Capital markets
Money makets

19
Q

Primary markets

A

Primary markets are markets in which users of funds (e.g corporations) raise funds through new issues of financial instruments such as stocks and bonds

20
Q

Secondary markets

A

Secondary markets are like used cor markets secondary market are markets for currently outstanding securities reffered to as secondary SecurIties

21
Q

Capital markets

A

Capital markets on the other hand are markets for long term securities long term securities are either debt securities or equity securities (stocks)

22
Q

Money markets

A

Money markets cover markets for short term debt instrument usually issued by companies with high credit standing they consist of a network of institution and facilities for trading debt securities with one year or less maturity

23
Q

Financial Institutions

A

If the two companies do not want to make an effort to find counterpart in the Financial Markets, they may go to a Financial Institution.

24
Q

Examples of financial institutions

A

Commercial banks
Insurance banks

25
Q

Commercial Banks

A

Individuals deposit funds at commercial banks, which use the deposited funds to provide commercial loans to firms and personal loans to individuals, and purchase debt securities issued by firms or government agencies.

26
Q

Insurance Companies

A

Individuals purchase insurance (life, property and casualty, and health) protection with insurance premiums. The insurance companies pool these payments and invest the proceeds in various securities until the funds are needed to pay off claims by policyholders.

27
Q

Examples of financial institutions

A

Mutual funds
Pension funds

28
Q

Mutual Funds

A

Mutual funds are owned by investment companies which enable small investors to enjoy the benefits of investing in a diversified portfolio of

29
Q

Pension Funds

A

these are financial institutions that receive payments from employees and invest the proceeds on their behalf.

30
Q

Banko sentral ng pilipinas

A

The bsp is responsible for overseing the country monetary system and policies controlling the money supplies

31
Q

Financial instrumets

A

Debt instrument
Equity instrument

32
Q

Debt instrument

A

Generally have fixed returns due to fixed interest rates

33
Q

Equity instrument

A

Generally have varied returns based on the performance of the issuing company returns from equity instrument come from either dividends or stock price appreciation

34
Q

Preferred Stock

A

has priority over a common stock in terms of claims over the assets of a company.

35
Q

Common stocks

A

on the other hand are the real owners of the company.

36
Q

6 steps of financial planning process

A

1.determine your current financial situation
2.develop financial goals
3.identify cources of actions
4.evaluate alternative
5.create and implement a financial action plan
6.re evaluate and revise your plan

37
Q

Criteria for effective planning

A

Specific
Measurable
Assignable
Realistic
Time related

38
Q

Forecasted unit sales x price per unit

A

Total gross sales

39
Q

Strategic plans

A

Long-term financial plans or the strategic plans are a set of goals that lay out the overall direction of the company. A long-term financial plan is an integrated strategy that takes into or make it more than 1 years

40
Q

Tactical Plans

A

Short-term financial plans or the tactical plans specify short-term financial actions and the anticipated impact of those actions. More than 12 months or even 1 year

41
Q

Examples of debt instrument

A

Treasury Bonds and Treasury Bills
Corporate Bonds

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