Brainscape's Knowledge GenomeTM

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


See full index

Business > Financial Management > Flashcards

Financial Management Flashcards

1
Q

inventory conversion period (icp)

A

average inventory/cost of sales per day

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

receivables collection period (rcp)

A

average receivables/ credit sales per day

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

payables deferral period (pdp)

A

average payables/ purchases per day

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

cash conversion cycle (ccc)

A

ICP+RCP-PDP

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

speculative balance

A

fund to take advantage of special business opportunities

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

precautionary balances

A

amounts that may be needed in emergency situations

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

treasury bills

A

short term obligations by the us with lives under 2 year. These are zero coupon form and pay no formal interes so they trade at a discount at maturity

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

treasury notes

A

obligations with initial lives between 1 to 10 years. Interest paid semiannually

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

treasure bonds

A

notes with lives over 10 years

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

treasury inflation protection securities (TIPS)

A

treasury notes and bonds that pay a fixed rate of interest but with principal adjusted semiannually for inflation

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

federal agency securities

A

offerings that may or may not be backed by the full faith and credit of the us and don’t trade as actively as treasuries but pay slightly higher rates

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

Economic order quantity (EOQ)

A

square 2AP/S

A=annual demand in units
P=cost of placing an order or beginning a production run
S=costing of carrying one unit in inventory for one period

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

Reorder point

A

average daily demand x average lead time

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

Safety stock

A

maximum daily demand x maximum lead time - reorder point

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

Just In Time Purchasing

A

Costs Reduced Through:
reduction in inventory quantities
elimination of non value adding operations
most appropriate when order cost low and carrying cost hight

Requires high quality control standards:
efficient system minimizing defective units
corrections made as defects occur
fewer vendors and suppliers

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

Problems with JIT system

A

difficult to find suppliers able to accommodate
high shipping costs due to smaller orders
potential problems due to delays in deliveries

May use back flush approach:
all manufacturing costs charged to cogs
costs allocated from cogs to inventories at reporting dates

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

prime rat

A

rate that the lender charges its creditworthy customers

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

london interbank offered rate (libor)

A

when the borrower and lender are in different countries, the base used will typically be the libor rather than the prime rate

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

Debt covenants

A

restrictions

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

debentures

A

unsecured bonds

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

callable bonds

A

the borrowing firm may force the bondholders to redeem the bonds before their normal maturity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

stated rate

A

fixed interest payment calculated form the FV of the bond. AKA coupon rate, face rate or nominal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Current yield

A

find interest payment divided by the current selling price of the bond.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Trading at a discount

A

rate will be higher than the state rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Trading at a premium

A

rate will be lower than the stated rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Yield to maturity

A

interest rate at which the pv of cash flows of interest and principal will equal the current selling price of the bonds. AKA effective rate or market rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

zero coupon bond

A

bond that makes no interest payments at all and only pays the fv on the date of maturity. always sells at a discount

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Floating rate bond

A

interest payments is not tied but fluctuates with some general index of interest rates

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Registered bond

A

bondholders name is registered with the firm, and interest payments are sent directly to the registered owner

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Junk bond

A

pays much higher than normal interest, since it is issued by a firm that has a poor credit rating

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Common Stock Advantages and Disadvantages

A

Advantages:
has no specific obligation to pay investors
increased equity reduces the risk to lenders and reduces borrowing costs

Disadvantages:
insurance costs are greater than for debt
ownership and control must be share with all shareholders
dividends are not tax deductible
shareholders receive a higher return than lenders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

operating leverage

A

% change in operating income/ % change in unit volume

higher fixed costs mean more risk when revenues are below expectations
profit grows rapidly relative to revenue increase due to lower variable costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Financial leverage

A

% change in earnings per share/ % change in earnings before interest and taxes

higher debt means higher interest and principal obligations for prepayment
Debt financing costs less than equity financing and doesn’t increase with greater performance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

horizontal merger

A

when a firm acquires another in the same line of business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

vertical merger

A

when a firm acquires another in the same supply chain

36
Q

conglomerate merger

A

when a firm acquires another in an unrelated line of business

37
Q

Balanced scorecard

A

Financial-return on investment and related financial measures

Customer-nonfinancia measures of customer satisfaction and retention

Internal business processes-measures of operating effectiveness and efficiency including financial measures, such as cost variances and non financial measures such as a number of defects in production

Learning and growth- measures of employee satisfaction training, and advancement

38
Q

The components of a balanced scorecard include:

A 
Strategic objectives
Performance measures
Baseline performance
Targets
Strategic initiatives
39
Q

ROI

A

net income/total assets

40
Q

Dupont return on investment

A

return on sales x asset turnover

41
Q

Return on sales

A

net income/sales

42
Q

Asset turnover

A

sales/total assets

43
Q

Residual income

A

operating profit - interest on investment

44
Q

Economic value added (EVA)

A

net operating profit after taxes (NOPAT)- cost of financing

45
Q

cost of financing

A

(total assets-current liabilities) x wacc

46
Q

Free cash flow

A

NOPAT + depreciation + amortization - capital expenditures - net increase in working capital

47
Q

Business Process Management

A

-Design: identify existing processes/possible improvements
-Modeling: what if analyses
-Execution
install new software, test, train implement process
-Monitor with performance stats
-Optimize
use performance statistics to identify bottlenecks
consider strategies to remove bottlenecks
-Other Techniques
reengineer
lean manufacturing
theory of constraints
-Workflow analysis: focus on eliminating non value added activities

48
Q

gross margin

A

gross profit/ net sales

49
Q

operating profit margin

A

operating profit/ net sales

50
Q

return on assets

A

net income/ average total assets

51
Q

return on equity

A

net income/ average common shareholders equity

52
Q

receivable turnover

A

net credit sales/ avg. ar

53
Q

inventory turnover

A

cogs/ avg inventory

54
Q

Inventory conversion period

A

avg inventory/ avg cogs per day

55
Q

fixed asset turnover

A

sales/average net fixed assets

56
Q

total asset turnover

A

sales/ average total assets

57
Q

current ratio

A

ca/ cl

58
Q

quick ratio

A

quick assets/ current liab

59
Q

quick assets

A

cash + marketable securities + ar

60
Q

debt to total assets

A

total liabilities/ total assets

61
Q

debt to equity ratio

A

total debt/ total equity

62
Q

times interest earned ratio

A

earnings before interest and taxes/ interest expense

63
Q

price/earnings ratio

A

common stock price per share/earnings per share

64
Q

book value per share

A

common stock equity/ common stock shares outstanding

65
Q

market/book ratio

A

common stock price per share/bv per share

market capitalization/ common stock equity

66
Q

internal benchmarking

A

similar operating within the org

67
Q

competitive benchmarking

A

direct competitors

68
Q

functional benchmarking

A

industry averages

69
Q

generic benchmarking

A

overall averages of all business enterprise

70
Q

pareto principle

A

an attempt to focus on the small number of significant quality issues, based on an estimate of 80% problems come from only 20% causes

71
Q

six sigma

A

99.9997% meet quality standards.

72
Q

kaizen

A

japanese art of continuous movement; emphasizes identification by all members of small improverments

73
Q

delphi

A

separate consultations with multiple experts and tabulation of recommendations

74
Q

Prevent costs

A

prevent product failure

use high quality material
inspect production process
train employees
maintain machines

75
Q

Appraisal or detection costs

A

detect product failure before production is complete

inspect samples of finished goods
obtain info from customers

76
Q

Internal failure costs

A

detect product failure after production but before shipment to customer

scrap resulting from wasted materials
reworking units to correct defects
reinspection and resetting after rework

77
Q

external failure costs

A

defective product sent to customer

warranty costs
dealing with customer complaints
product liability
marketing to improve image
lost sales
78
Q

Effective project management

A

resources
time
money scope

79
Q

project initiation

A

support of manangement
project management with authority
project charter

80
Q

project planning

A

define scope
identify resources needed
schedule tasks
identify risks

81
Q

project execution

A

managing work

directing team

82
Q

project monitoring and control

A

tracking progress

comparing actual outcomes to predicted outcomes

83
Q

gantt chart

A

bar chart that illustrates the scheduled start and finish of elements

84
Q

projet evaluation and review technique (pert)

A

focus on interdependency of activities and time required to complete a project

85
Q

abc analysis

A

tasks are perceived as being urgent and important
tasks are important but not urgent
tasks are neither urgent nor important

Business (6 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions