Chunk 1 Flashcards
What is finance in the context of business?
Finance is a key business function involving the management of a company’s monetary resources to maximize profitability and sustain growth.
It includes budgeting, forecasting, accounting, and financial reporting.
What is the strategic role of financial management?
The strategic role involves planning, optimization, and control of financial resources to achieve long-term business objectives, such as profitability maximization.
What is profitability?
Profitability is the measure of a business’s ability to generate more revenue than its expenditures over time.
What are the objectives of maximizing profitability?
- Increase revenue
- Control costs
- Sustain long-term growth
- Create shareholder value
What is growth in a business context?
Growth is the increase in a business’s size, market share, or revenue over time.
How can a business achieve growth?
- Managing and using assets to increase sales
- Mergers
- Acquisitions
- Diversification
- Franchising
What does efficiency refer to in financial management?
Efficiency is about maximizing output or returns from a given set of inputs or resources.
What is liquidity?
Liquidity is how easily a business can turn assets into cash or have enough funding to pay off its short-term debts.
What are current assets?
- Debtors
- Cash
- Inventory
What are current liabilities?
- Creditors
- Debt
- Overdrafts
- Payables
What is solvency?
Solvency refers to a company’s ability to sustain operations in the long term by having sufficient assets to cover its liabilities.
What are the short-term objectives of financial management?
Short-term objectives focus on addressing immediate financial needs and ensuring stability.
What are the long-term objectives of financial management?
Long-term objectives aim for sustained growth and value creation over time.
What does interdependence refer to in business functions?
Interdependence refers to the mutual dependence that key business functions have on one another.
How does finance depend on marketing?
Finance relies on marketing to promote products, generate sales revenue, and bring in funds.
What is the role of human resources in financial management?
Human resources depend on finance for funds needed to implement HR strategies.
Fill in the blank: The _______ is a measure of a business’s ability to sustain operations in the long term.
solvency
True or False: Liquidity is only about long-term financial health.
False
What is the significance of capital structure optimization?
It minimizes costs and maximizes shareholder value.
What financial challenge did Qantas face in 2014?
Qantas reported a loss of $646 million due to struggling international operations and high fuel prices.
What was the NPR for Qantas in 2023?
20%.
What is the efficiency objective in financial management?
Minimize waste and reduce costs while maintaining or improving quality and productivity.
What does the liquidity ratio indicate?
It indicates the ability to cover immediate expenses and current liabilities.
What was Qantas’s liquidity ratio in 2022?
0.53:1.
What is the gearing ratio for Qantas in 2023?
1069:1.
