Chapter 1 Textbook Flashcards
What are the 5 basic areas of finance?
Corporate Finance
Investments
Financial Institutions
International Finance
FinTech
Which area of finance deal with financial assets such as stocks and bonds?
Investments
Which area of finance deals with these questions?
1) What determines the price of a financial asset, such as a share of stock?
2) What are the potentials risks and rewards associated with investing in financial assets?
3) What is the best mixture of financial assets to hold?
Investments
Which area of finance offers job opportunities as stock brokers, financial advisors, portfolio managers, and security analysis
Investments
Businesses that deal primarily in financial matters are known as
Financial Institutions
Which are of finance is widely known for being banks and insurance companies?
Financial Institutions
Careers in this area of finance generally involve international aspects of corporate finance, investments, or financial institutions this is known as?
International Finance
The combination of technology and finance is called
Fintech
Which term is broad for a company that uses the internet, mobile phones, software, and/ or cloud services to provide financial services
FinTech
Which area of finance needs to be familiar with exchange rates and political risks
International Finance
Why is it important to study finance in marketing?
- understand budgets
- use it in marketing research
- understanding how to market financial products
Why is it important to study finance in accounting
- for the dual accounting and finance function
- in order to prepare financial statements
Why is it important to study finance in management
- teaches how to think strategically
- for job performance
- profitability
Why is it important to study finance in personal finance
- to know how to budget
- for retirement planning
- college planning
- day-to-day cash flow issues
Questions like
1) What long-term investments should you take on?
2) Where will get the long term financing to pay fro your investments?
3) How will you manage your everyday financial activities such as collecting from customers and paying suppliers?
all describe what type of finance?
Business Finance
T/F- The financial management function is usually associated with a top officer of the firm called chief financial officer (CFO)
True
Cash managers
Credit managers
Capital Expenditures
Financial Planners all report to which financial component of a corporation?
Treasurer
- Tax managers
- Cost accounting managers
- Financial Accounting Managers
- Data processing managers
all report to which financial component of a corporation?
Controller
The treasure and controller all report to which corporation management?
Vice President of Finance (CFO)
The vice president of marketing, CFO, and vice president of production all report to which form of corporate management?
President and Chief Operations Officer (COO)
The process of planning and managing a firm’s long-term investments is known as
Capital Budgeting
T/F- In capital budgeting, the financial manager tries to identify investment opportunities that are worth more to the firm than they cost to acquire
True
T/F- Whenever we evaluate a business decision, the size, timing, and risk of the cash flows will be, by far, the most important thing a firm considers
True
What are the three financial management decisions?
- Capital Budgeting
- Capital Structure
- Working Capital Management
What is the first question the firm’s long term investments must determine?
Capital Budgeting
What is the second question the firm must ask in order to obtain financing it needs to support its long term investments?
Capital Structure
The mixture of long term debt and equity the firm uses to finance its operations is known as
Capital Structure
During the capital structure area, the financial manager has two main concerns. What are they?
1) How much should the firm borrow?
2) What are the least expensive sources of funds for the firm?
T/F- In addition to the capital structure area, the financial manager has to decide exactly where and how to raise money
True
What is the third question the firm’s financial management team asks for short term assets such as inventory, and its short-term liabilities, such as money owed to suppliers
Working Capital Management
What term refers to a firm’s short-term assets, such as inventory, and its short term liabilities, such as money owed to suppliers is known as
Working Capital Management
What are the 4 questions that must be answered concerning working capital management?
1) How much cash and inventory should we keep on hand?
2) Should we sell on credit to our customers
3) How will we obtain any needed short-term financing?
4) If we borrow int eh short term, how and where should we do it?
A business owned by a single individual is known as
Sole Proprietorship
Which type of business is the easiest to start and is the least regulated form of organization?
Sole Proprietorship
T/F- There are more sole proprietorships than any other type of business, and many businesses that later become large corporations start out as small proprietorships
True
What long term investments or projects should the business take on is a question for which financial management decision group?
Capital Budgeting
1) How should we pay our assets?
2) Should we use debt or equity?
is a question for which financial management decision group?
Capital Structure
How do we manage the day-to-day finances of the firm?
is a question for which financial management decision group?
Working Capital Management