Financial management

Question 1

3 Major business activities in a firm

Answer 1

1. Production
2. Marketing
3. Finance

Question 2

Fund management science

Answer 2

1. Choice of financial market
2. Choice of financial instrument
3. Optimum capital structure decision
4. Optimization of cost of capital

Question 3

EBIT

Answer 3

= Earnings before interest & taxes

Question 4

Balance sheet

Answer 4

Start/End of the year

Question 5

Debet

Answer 5

Fixed assets
Current assets
(Possessions, investments, assets)

Question 6

Credit

Answer 6

Equity (trust)
Long term liability (debt) (contract)
Short term liability (debt) (contract)
Profit
(Liabilities, financed)

Question 7

Business plan functions

Answer 7

Starter: Reality check, roadmap
Financer: means of persuasion for making capital available

Question 8

Financing start-ups

Answer 8

Traditionally: Equity, Bank, Suppliers, Venture capitalists
New forms: Angel investors, crowd funding

Question 9

Fixed assets

Answer 9

Building, plot, supplies, machines, means of transport

Question 10

Current assets

Answer 10

Invantory of raw material,
There are no outstanding payments from clients as nothing has yet been sold
Cash and cash equivalents (money, bank balance)

Question 11

Opening balance sheet

Answer 11

Overview of investments and funding at start
Combination of investment plan and financing plan

Question 12

Forecast income statement 1st year

Answer 12

Overview of the expected sales revenue and costs with a prognosis of profit/loss
Revenue: from sales
Costs: Depreciation, rent, lease, costs of sold goods, staff, financing