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ABM 306: Business Finance > Chapter 1: Introduction to Financial Management > Flashcards

Chapter 1: Introduction to Financial Management Flashcards

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1
Q

The study and management of money, assets, and investments to build wealth and achieve organizational goals.

A

Finance

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2
Q

Essential for acquiring, managing, and investing resources to achieve growth, stability, profitability, and liquidity within a business.

A

Finance

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3
Q

What are the 3 Areas of Finance?

A
  • Financial Institutions and Markets
  • Investments
  • Financial Management
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4
Q

This area focuses on the interaction between fund providers and users, facilitated by financial intermediaries.

A

Financial Institutions and Markets

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5
Q

Involves the creation of financial assets, market regulations, and the trading of securities.

A

Financial Institutions and Markets

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6
Q

These play a crucial role in ensuring the efficient flow of capital and enabling economic growth.

A

Financial Institutions and Markets

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7
Q

What are examples of Financial Institutions and Markets?

A
  • Banks
  • Investment Firms
  • Insurance Companies
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8
Q

Encompasses the buying and selling of financial securities, the analysis of investment opportunities, and the management of risks.

A

Investments

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9
Q

Both individuals and institutions participate in this domain to achieve their financial goals–whether it’s building wealth, securing retirement, or financing business expansions.

A

Investments

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10
Q

The process of raising, allocating, and controlling a firm’s funds.

A

Financial Management

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11
Q

This includes decisions about capital structure, working capital management, and the allocation of resources to maximize profitability and shareholder value.

A

Financial Management

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12
Q

Ensures the efficient use of financial resources to support the organization’s strategic objectives.

A

Financial Management

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13
Q

What are the 4 Categories of Finance?

A
  • Public Finance
  • Personal Finance
  • Business Finance
  • Non-profit Finance
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14
Q

Involves government revenues and expenditures and their impact on the economy.

A

Public Finance

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15
Q

Encompasses the management of public funds, taxation policies, and government budgeting.

A

Public Finance

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16
Q

Focuses on the management of an individual’s or household’s financial resources.

A

Personal Finance

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17
Q

Includes budgeting, saving, investing, and spending decisions to enhance one’s economic well-being.

A

Personal Finance

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18
Q

This category considers various investment options, benefits, and risks; these include banking products, insurance, and retirement.

A

Personal Finance

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19
Q

Involves the management of funds and assets within a company.

A

Business Finance

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20
Q

Differs from accounting in that it uses accounting data and draws from a broader range of disciplines like economics and business law to make informed decisions about the future operations of the business.

A

Business Finance

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21
Q

How is Business Finance different than Accounting?

A
  • Accounting is focused on the business’ transactions and balancing the books; and
  • Business Finance uses the data from accounting to make informed decisions for the future operations of the business.
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22
Q

For organizations that often rely on donations and grants that fund their operations and activities.

A

Non-profit Finance

23
Q

Non-Profit Organizations (NGOs) must manage their finances in a manner that aligns with their mission and goals.

What are examples of the types of NGOs?

A
  • Charities
  • Educational Institutions
  • Environmental Groups
24
Q

What are the 3 Roles of the Finance Manager?

A
  • Investment Decision
  • Financing Decision
  • Dividend Policy
25
Q

Finance managers are responsible for allocating funds prudently, considering the associated risks and expected returns, to sustain the firm’s market value and ensure the long-term growth and profitability of the organization.

A

Investment Decision

26
Q

Finance managers must choose the best financing mix, whether it’s short-term or long-term, to fund the firm’s operations and meet the expected returns for investors and stakeholders.

A

Financing Decision

27
Q

This policy must balance the needs of attracting investors and and reflecting the company’s profitability and and growth potential.

A

Dividend Policy

28
Q

What are the 4 Parts of the Philippine Financial System?

A
  • Banking Institutions
  • Non-Bank Financial Institutions
  • Financial Intermediaries
  • Financial Markets
29
Q

Examples of which are either private (universal, commercial, thrift, rural, cooperative, and Islamic) or government-owned.

A

Banking Institutions

30
Q

Examples of which are investment banks, insurance companies, credit unions, and pawnshops.

A

Non-Bank Financial Institutions

31
Q

Acts as middlemen between those with excess funds (investors) and those in need of funds (borrowers).

A

Financial Intermediaries

32
Q

Where buyers and sellers trade financial assets like stocks, bonds, and currencies.

A

Financial Markets

33
Q

What are examples of Financial Markets?

A
  • Money Market
  • Capital Market
  • Bond Market
  • Stock Market
34
Q

What are the 3 Types of Business Organizations?

A
  • Sole Proprietorship
  • Partnership
  • Corporation
35
Q

A business owned by a single person.

A

Sole Proprietorship

36
Q

A type of business organization wherein…

PROS: Ease of formation, complete control for the owner, and simplified tax structures.

CONS: Limited life, unlimited liability, and difficulty in raising capital.

A

Sole Proprietorship

37
Q

A business owned by two or more persons who share
profits.

A

Partnership

38
Q

A type of business organization wherein…

PROS: Ease of formation, shared expertise, better capitalization.

CONS: Limited life, unlimited liability, and complex decision-making.

A

Partnership

39
Q

A legal entity with rights and powers separate from its
owners (shareholders).

A

Corporation

40
Q

A type of business organization wherein…

PROS: Limited liability, indefinite life, and ease of obtaining capital.

CONS: Double taxation, more government control.

A

Corporation

41
Q

What are the 3 elements highlighted in The Organizational Goal: Maximizing Shareholder Wealth?

A
  • Unlimited Wants, Limited Resources
  • Spending vs. Investing
  • Finance Manager’s Role
42
Q

Because of this, people seek
to maximize their satisfaction through spending, saving, or
investing.

A

Unlimited Wants, Limited Resources

43
Q

Doing this provides immediate satisfaction but no future returns.

A

Spending

44
Q

Doing this grows wealth but delays gratification.

A

Investing

45
Q

Their job is to ensure the firm’s
products and services grow investors’ wealth, thereby maximizing stockholder value.

A

Finance Manager

46
Q

What are the 3 Importance of Finance for Business Sustainability?

A
  • Financial Planning
  • Better Investment Decisions
  • Informed Economic Decisions
47
Q

Individuals and firms create financial plans to effectively acquire, manage, and allocate funds, which is is crucial for business sustainability.

A

Financial Planning

48
Q

Finance education equips investors with the knowledge to make informed decisions. This enhances their potential returns and contributes to the overall success of the business.

A

Better Investment Decisions

49
Q

Understanding finance helps in making sound financial and economic choices. This is essential for both personal and organizational prosperity and longevity.

A

Informed Economic Decisions

50
Q

What are the 3 Key Roles in Financial Management?

A
  • Chief Finance Officer (CFO)
  • Treasurer
  • Controller
51
Q

Oversees all financial activities within the organization, reporting directly to the president or board of directors.

A

Chief Finance Officer (CFO)

52
Q

Responsible for managing the external financial matters of the business. This includes investments, capital budgeting, and risk management, supporting the overall financial strategy of the organization.

A

Treasurer

53
Q

Handles the internal financial affairs of the company. This is including accounting, financial reporting, and asset protection, ensuring the accuracy and integrity of the organization’s financial information.

A

Controller

54
Q

Who controls the foreign exchange and stock market in the Philippines?

A

Bangko Sentral ng Pilipinas

ABM 306: Business Finance (4 decks)

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