Finance

Question 1

Factoring

Answer 1

The selling of discounts receivable for a discounted price to a finance or factoring company.

Question 2

What is a mortgage?

Answer 2

A loan secured by the property of the borrower.

Question 3

What is a debenture?

Answer 3

Debentures are issued by a company for a fixed rate for a fixed time.

Question 4

What are the various financial institutions?

Answer 4

Banks, investment banks, finance companies, superannuation companies, life insurance companies, unit trusts, Australian security exchange (ASX)

Question 5

How does the government impact upon business?

Answer 5

Company tax (set at 30%)
Regulation
Economic policy

Federal gov also established independent statuary commissions like the Australian Securities and Investment Comission (ASIC)

Question 6

Global Market Influences

Answer 6

Globalisation has had significant impact on world financial markets and independence.

Question 7

Components of the global financial markets?

Answer 7

Economic outlook
Availability of funds
Interest rates

Question 8

How are the availability of funds influenced?

Answer 8

By supply, demand and risk. Increase in demand - price increases. More risk involved - price pushed higher.

Question 9

What is financial management?

Answer 9

Planning and monitoring of a businesses financial resources to achieve its business goals.

Question 10

Objective goals are to maximise the

Answer 10

(Liquid PEGS)
Liquidity
Profitability
Efficiency 
Growth
Solvency

Question 11

Short term and long term financial objectives?

Answer 11

Short term - tactical (1-3 years) and operational (day to day) plans of business.
Long term objectives - strategic plans of business. Usually more than 5 years set period of time.

Question 12

Differences between internal and external sources?

Answer 12

Internal finance - businesses owner (equity or capital) or from outcomes of business activities (retained profits)

External finance - provided by sources outside business.

Question 13

Owners equity?

Answer 13

Is the funds provided by the owners or partners to establish and build the business.

Question 14

Main features of commercial bills?

Answer 14

Issued by institutions other than banks, usually over $100,000 , period between 90-180 days.

Question 15

Factoring?

Answer 15

Selling accounts receivable for discounted price to a finance or factoring company

Question 16

Why is factoring an important source?

Answer 16

Up to 90% of amount recordable a within 48 hours.

Question 17

Commercial bills are?

Answer 17

Type of Bill of exchange (loan) issued by institutions other than banks.