Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Practical Business Knowledge > Financial Management > Flashcards

Financial Management Flashcards

1
Q

What is the primary goal of financial management?

A

To maximize shareholder wealth.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

True or False: Financial management only deals with the acquisition of funds.

A

False

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Fill in the blank: The __________ is a financial statement that summarizes a company’s assets, liabilities, and equity.

A

balance sheet

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What does ROI stand for in financial management?

A

Return on Investment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Which financial statement shows a company’s revenues and expenses over a specific period?

A

Income statement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Multiple Choice: Which of the following is a long-term financing option? A) Bank loans B) Bonds C) Trade credit

A

B) Bonds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is the formula for calculating net income?

A

Net Income = Revenues - Expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

True or False: Working capital is calculated as current assets minus current liabilities.

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Fill in the blank: The __________ ratio measures a company’s ability to pay short-term obligations.

A

current

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is the purpose of a cash flow statement?

A

To provide information about cash inflows and outflows over a period.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Multiple Choice: Which of the following is NOT a type of financial management? A) Capital budgeting B) Financial forecasting C) Market research

A

C) Market research

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What does the term ‘leverage’ refer to in financial management?

A

The use of borrowed funds to increase the potential return on investment.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

True or False: Equity financing involves selling shares of stock in a company.

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Fill in the blank: The __________ is a financial metric that indicates the percentage of revenue that exceeds costs.

A

profit margin

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is a budget?

A

A financial plan that outlines expected revenues and expenditures over a specific period.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Multiple Choice: Which of the following is a source of short-term financing? A) Common stock B) Commercial paper C) Bonds

A

B) Commercial paper

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is the purpose of financial forecasting?

A

To predict future financial conditions and performance.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

True or False: The break-even point is where total revenues equal total costs.

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Fill in the blank: __________ analysis is used to assess the profitability of different investment options.

A

Cost-benefit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is capital budgeting?

A

The process of planning and managing a firm’s long-term investments.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Multiple Choice: Which of the following is a measure of a company’s profitability? A) Debt-to-equity ratio B) Return on equity C) Current ratio

A

B) Return on equity

22
Q

What does the term ‘dividend’ refer to?

A

A portion of a company’s earnings distributed to shareholders.

23
Q

True or False: The cost of capital is the return expected by those who provide capital to the company.

A

True

24
Q

Fill in the blank: The __________ is a ratio that compares a company’s current assets to its current liabilities.

A

current ratio

25
Q

What is the significance of the time value of money?

A

It states that a dollar today is worth more than a dollar in the future due to its potential earning capacity.

26
Q

Multiple Choice: Which of the following describes a fixed cost? A) Cost that changes with production levels B) Cost that remains constant regardless of production levels C) Cost that varies with sales

A

B) Cost that remains constant regardless of production levels

27
Q

What is risk management in financial management?

A

The identification, assessment, and prioritization of risks followed by coordinated efforts to minimize, monitor, and control the probability of unfortunate events.

28
Q

True or False: A high debt-to-equity ratio indicates a company is heavily financed by debt.

A

True

29
Q

Fill in the blank: __________ financing is raised through the sale of stocks and shares.

A

Equity

30
Q

What is the purpose of ratio analysis?

A

To evaluate the financial performance and position of a company.

31
Q

Multiple Choice: Which financial ratio indicates how much profit a company makes for every dollar of sales? A) Gross profit margin B) Net profit margin C) Operating profit margin

A

B) Net profit margin

32
Q

What does the term ‘asset’ refer to?

A

Resources owned by a company that have economic value.

33
Q

True or False: Accounts receivable are considered a liability.

A

False

34
Q

Fill in the blank: The __________ is a financial statement that shows the changes in equity from transactions with shareholders.

A

statement of changes in equity

35
Q

What is a financial market?

A

A marketplace where buyers and sellers participate in the trade of assets such as stocks, bonds, and currencies.

36
Q

Multiple Choice: Which of the following is considered an intangible asset? A) Equipment B) Patents C) Inventory

A

B) Patents

37
Q

What is the difference between gross profit and net profit?

A

Gross profit is revenue minus cost of goods sold, while net profit is gross profit minus all other expenses.

38
Q

True or False: A budget variance occurs when actual financial performance deviates from the budgeted performance.

A

True

39
Q

Fill in the blank: __________ is the process of evaluating investment opportunities to determine their potential returns.

A

Investment appraisal

40
Q

What is the role of a financial manager?

A

To oversee the financial health of an organization and make strategic financial decisions.

41
Q

Multiple Choice: Which of the following is a method of valuing a company’s stock? A) Cost approach B) Market approach C) Income approach

A

C) Income approach

42
Q

What does the term ‘liability’ refer to?

A

Obligations that a company owes to outside parties.

43
Q

True or False: Financial management only focuses on short-term financial goals.

A

False

44
Q

Fill in the blank: __________ is the return on an investment expressed as a percentage of the original investment.

A

Yield

45
Q

What is a financial ratio?

A

A quantitative relationship between two financial statement figures.

46
Q

Multiple Choice: What is the primary source of funding for a startup company? A) Debt financing B) Venture capital C) Retained earnings

A

B) Venture capital

47
Q

What does diversification in finance mean?

A

Spreading investments across various assets to reduce risk.

48
Q

True or False: A company can be profitable but still experience cash flow problems.

A

True

49
Q

Fill in the blank: The __________ measures the liquidity of a company and its ability to cover short-term obligations.

A

quick ratio

50
Q

What is the purpose of a financial audit?

A

To examine and verify a company’s financial statements and accounting practices.

Practical Business Knowledge (13 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions