FINANCE: Role

Question 1

What is the role of financial management?

Answer 1

Sourcing finance.
Preparing budgets.
Maintaining sufficient cash flow.

Question 2

Profitability definition.

Answer 2

The ability of a business to maximise its profits.

Question 3

Growth definition.

Answer 3

The ability of the business to increase its size in the longer term.

Question 4

Efficiency definition.

Answer 4

The ability to minimise costs and manage its assets so that maximum profit is achieved.

Question 5

Liquidity definition.

Answer 5

The ability for a business to meet its financial commitments in the short term.

Question 6

Solvency definition.

Answer 6

The ability for a business to meet its financial commitments in the long term.

Question 7

Gearing definition.

Answer 7

Measures the percentage of assets which are funded by external sources.

Question 8

What is the difference between short and long term objectives?

Answer 8

Tactical objectives are one to two years and operational objectives are day-to-day.