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2nd year - 1st sem > FINMAN > Flashcards

FINMAN Flashcards

1
Q

An important tool used in time value analysis; it is a graphical representation used to show the timing of cash flows.

A

Time Line

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2
Q

The amount to which a cash flow or series of cash flows will grow
over a given period of time when compounded at a given interest rate.

A

Future Value (FV)

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3
Q

______can be defined as the science and art of managing money

A

Finance

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4
Q

A ________ is an organizational entity involved in the provision of goods and services to customers mostly to gain profit.

A

business

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5
Q

set of detailed accounting guidelines and standards.

A

(GAAP): a

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6
Q

(GAAP): stands for

A

Generally Accepted Accounting Principles

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7
Q

_____: a fundamental concept in finance that states money available today is worth more than the same amount in the future.

A

Time Value

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8
Q

_______: The current value of future cash flows discounted at the appropriate discount rate.

A

Present Value

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9
Q

Present Value: formula

A

PV = FV/(1+r)^n

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10
Q

______: The value of investment at a specific point in the future after earning interest or returns.

A

Future Value

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11
Q

Calculated by compounding present cash flows over time.

A

Future Value

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12
Q

Formula of future value

A

FV = PV x (1+r)^n

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13
Q

What is the future value of 10,000, 20 years from now given annual interest rate of 6%.

A

FV = 32,071.35

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14
Q

What is the present value of 10,000, 10 years from now given the same annual interest rate of 6%.

A

PV = 5,583.95

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15
Q

________: Involves determining the rate of return that equates a present value to its future value.

A

Finding Interest Rate

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16
Q

Often solve using financial calculators or algebraic methods

A

Finding Interest Rate

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17
Q

The 3 general types of annuities

A
  1. ordinary annuity
  2. annuity due
  3. perpetuity
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18
Q

__________ pays a fixed amount at the end of each period, an

A

ordinary annuity

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19
Q

______ pays forever.

A

perpetuity

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20
Q

______ pays a fixed amount at the beginning of each period,

A

annuity due

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21
Q

______: This is mainly concerned with using efficiently the important economic resources of a firm like its capital funds.

A

Financial Management

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22
Q

______ own shares in any company.

A

Shareholders

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23
Q

_______specifically own stock in a corporation

A

stockholders

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24
Q

_____: the language of finance

A

Accounting

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25
Q

_____: modern approaches to financial management that applies a large number of mathematical and statistical tools and techniques.

A

Econometrics

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26
Q

_____: The amount of cash and cash-equivalents being transferred into and out of a business.

A

Cash flow

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27
Q

_____: Holders of shares receive dividends from a corporation as returns of their investments

A

Dividends

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28
Q

_______: A financial product that involves series of equal payments made a regular intervals over a specified period of time (Semi-annually, Quarterly or monthly).

A

Ordinary Annuity

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29
Q

_______: A type of annuity that pays an infinite series of cash flows.

A

PERPETUITIES

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30
Q

The present value of a ______ can be calculated when the interest rate and periodic payment are known.

A

perpetuity

31
Q

which are annuities that have an infinite term. In other words, the payments last forever.

A

perpetuity

32
Q

There is no future value formula. Because a _______lasts forever, the future value is an undefined quantity.

A

perpetuity

33
Q

Formula perpetuity:

A

PV = C/R

34
Q

If you have a perpetuity that pays 1000 dollars annually and the discount rate is 5%, the present value would be:

A

PV = 1000/0.05 = 20,000

35
Q

_____ : How cash moves in and out of a business.

A

CASH FLOW

36
Q

It shows the cash generated and used during a specific period, which helps evaluate a company’s liquidity, solvency, and over all financial health.

A

CASH FLOW

37
Q

Cash flow that varies in amount from period to period.

A

UNEVEN CASH FLOWS

38
Q

These are common in real world financial situations.

A

UNEVEN CASH FLOWS

39
Q

Formula for uneven cashflows

A

PV = FV/(1+R)^n

40
Q

The process of earning interest on both the initial principal and the accumulated interest from previous periods.

A

COMPOUNDING:

41
Q

True or False: The more frequently compounding occurs(e.g., daily, monthly,annually) the greater the value of the investment.

A

True

42
Q

True or False: Accounting, as a practice, dates back thousands of years.

A

TRue

43
Q

True or False: Early civilizations used accounting for trade and taxes

A

true

44
Q

Double entry system (suma de arithmetica, geometria, proportion et proportionalita), formalized by _____ in 15th century.

A

Luca Pacioli

44
Q

_____ laid the foundation for modern financial accounting

A

Luca Pacioli

45
Q

They ensure that financial reporting is consistent and transparent.

A
  • GAAP (GENERALLY ACCEPTED ACCOUNTING PRINCIPLES)
  • IFRS (INTERNATIONAL FINANCIAL REPORTING STANDARDS)
46
Q

Formal records that summarize a company’s business activities.

A

FINANCIAL STATEMENTS:

47
Q

Help stakeholders like investors, managers, and regulators asses financial health.

A

FINANCIAL STATEMENTS:

48
Q

Three major financial statements:

A

Balance Sheet
Income Statement
Cash Flow Statement

49
Q

gives a snapshot of a company’s financial standing at a specific point in time.

A

Balance Sheet or Statement of Financial Position,

50
Q

It shows what company owns, owes and value left for the owner

A

Balance Sheet or Statement of Financial Position,

51
Q

ASSETS =LIABILITIES - OWNER’S EQUITY

A

Balance Sheet or Statement of Financial Position,

52
Q

Sharing, provides a summary of a company’s revenues and expenses over a specific period, revealing the company’s profitability.

A

Income Statement: also called Profit and Loss

53
Q

NET INCOME = REVENUES - EXPENSES

A

Income Statement: also called Profit and Loss

54
Q

the income from core business operations (ex. sales)

A

Revenues:

55
Q

Costs incurred in generating revenue (ex. Rent, salaries, materials)

A

Expenses:

56
Q

The company’s profit after all the expenses are deducted. If expenses exceed the revenues, the company will report loss.

A

Net Income:

57
Q

Shows how a company’s cash positions changes over time.

A

Statement of Cash Flows:

58
Q

Cash Flow is divided into three sections that track cash inflows and outflows from different activities:

A
  1. Operating Activites:
  2. Investing Activities:
  3. Financing Activities:
59
Q

Cash related to debt, equity, and dividends (eg. loan repayments, issuance of stocks)

A

Financing Activities:

60
Q

Cash spent on or received from buying or selling assets(ex. Equipment, purchases, sale of investments)

A

Investing Activities:

61
Q

Cash generated or used from day to day business operations (ex. Sales, receipts, payments to suppliers)

A

Operating Activites:

62
Q

The overall change in cash over the reporting period.

A

Net Cash Flow:

63
Q

indicates more cash is coming in than going out

A

Positive cash flow:

64
Q

shows the opposite.

A

Negative cash flow:

65
Q

Explain the company’s retained earnings over a period.

A

STATEMENT OF RETAINED EARNINGS

66
Q

_____are the portion of net income that is not distributed as dividends but kept in the business to reinvest or pay down debt.

A

Retained earnings

67
Q

formula of retained earnings

A

Ending Retained Earnings = Beginning Retained Earnings + Net Income - Dividends

68
Q

This statement connects the income statement and balance sheet by showing how profits are reinvested or distributed.

A

STATEMENT OF RETAINED EARNINGS

69
Q

True of False: The statement of cash flows provides a snapshot of a company’s financial position at a single point in time

A

False

70
Q

True or False: The statement of retained earnings records changes in shareholder equity due to dividends and retained earnings

A

true

71
Q

True or false: Net cash flow is calsulated by adding cash from operating, investing, and financing activities

A

true

72
Q

true or false: income statement shows. a company’s revenues and expenses over a specific period of time

A

true

73
Q

True or False: The present value of a future sum decreases as the discount rate increases

A

true

2nd year - 1st sem (15 decks)

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