Finance Flashcards
What is the difference between ‘exchange rates’ as a financial influence vs as a financial strategy?
Give examples of each.
As an influence, an example is the depreciation of the Australian dollar, which makes AU exports cheaper for overseas customers.
As a strategy, an example is use of forward contracts, insulating a business from unfavourable movement in the exchange rate.
What is the acronym for the objectives of financial management, and what does it stand for?
GLEPS: Growth, liquidity, efficiency, profitability, solvency
What is the strategic role of financial management?
To provide financial resources to the business, and achieve it’s strategic plans
What is Growth as a financial management objective, and is it short or long term?
Growth is the ability of the b. to increase its size in the long-term, ensuring sustainability and development in the businesses future.
Growth is LONG-TERM.
What is Liquidity as a financial management objective, and is it short or long term?
Liquidity is the ability of the business to pay short-term debts in time.
Liquidity is SHORT-TERM.
What is Efficiency as a financial management objective, and is it short or long term?
Efficiency is the ability of the business to minimise costs & manage resources to achieve maximum profit.
Efficiency is both SHORT-TERM and LONG-TERM.
What is Profitability as a financial management objective, and is it short or long term?
Profitability is the ability to make and maximise profits.
It is SHORT-TERM and LONG-TERM.
What is Solvency as a financial management objective, and is it short or long term?
Solvency is the ability of the business to pay short and long-term debts on time. It includes gearing.
Solvency is LONG-TERM.
What are the 4 key business functions?
- Finance
- Operations
- Marketing
- Human Resources
What is the acronym for SHORT-term borrowing as a form of debt, and what does it stand for?
FOC.
Factoring, Overdraft & Commercial Bills.
What is the acronym for LONG-term borrowing as a form of debt, and what does it stand for?
DULM.
Debentures, Unsecured Notes, Leasing & Mortgage.
What are the types of non-private equity?
New issues, rights issues, placements & share purchase plans.
What is the acronym for FINANCIAL INSTITUTIONS as a form of debt, and what does it stand for?
BISLUAF
B anks
I nvestment Banks
S uperannuation Funds
L ife insurance Companies
U nit trusts
A SX
F inance Companies
What are the global market influences?
Economic Outlook
Availability of Funds
Interest Rates
