Fundamental Concepts and Tools of Business Finance

Question 1

May be defined as the study of the acquisition and investment of cash for enhancing value and wealth.

Answer 1

Finance

Question 2

deals with the revenue and expenditure patterns of the government

Answer 2

Public Finance

Question 3

deals with the revenue and expenditure patterns of the government, individual and businesses

Answer 3

Private Finance

Question 4

Is concerned with the fundamentals of managing one’s own personal money affairs.

Answer 4

Personal Finance

Question 5

Includes private undertakings such as charity, religion, and some private educational institutions.

Answer 5

Finance of non-profit organization

Question 6

It refers to the provision of money for commercial use.

Answer 6

Business Finance

Question 7

The Goals of Business Finance

Answer 7

1. Maximizing profit
2. maximizing profitability
3. maximizing profit subject to cash constraint
4. maximizing net present worth
5. seeking an optimum position along a risk- return frontier.

Question 8

Concerned with Business Finance

Answer 8

Small Business Finance
Corporation Finance
Multinational Finance

Question 9

2 type of Finance

Answer 9

Public Finance
Private Finance

Question 10

Means realizing the highest possible peso or dollar income.

Answer 10

Maximizing Profit

Question 11

This concept indicates that money increases in value with the passing of time .

Answer 11

Time value of money

Question 12

Can set a goal of achieving the best possible combination of risk and return.

Answer 12

Firm

Question 13

Are those that present financial information to various interested parties.

Answer 13

Financial Statement

Question 14

Is the statement produced periodically , normally at the end of a financial year, showing an organization’s assets, liabilities, and the interest of the owners.

Answer 14

The balance sheet

Question 15

The assets section of the balance sheet shows everything that the firm owns and which has the monetary value.

Answer 15

Assets

Question 16

Type of Assets

Answer 16

Current Assets
Trade Investment
Fixed Assets
Intangible Assets

Question 17

These are composed of cash, bank deposits, and other items readily convertible into cash like accounts receivable, stocks and work-in-process, and marketable securities;

Answer 17

Current Assets

Question 18

These are composed of investments in subsidiary or associated companies;

Answer 18

Trade Investment

Question 19

These items show the firms ownership of property like land, buildings, plan and machinery, equipment, vehicles, furniture and fixtures, all valued at cost less depreciation written off;

Answer 19

Fixed Assets

Question 20

These items present goodwill, patents, copyright which are attributed to the firm.

Answer 20

Intangible Assets

Question 21

It shows the profile of the debts of the company. They are classified into several items:

Answer 21

Liabilities

Question 22

These are usually composed of debts payable within a few days, weeks , or months, like those incurred in the purchase of raw materials and stocks.

Answer 22

Account Payable

Question 23

These are debts evidenced by promissory notes and oftentimes backed up by collateral.

Answer 23

Loans and Notes Payable

Question 24

Sometimes, customers are required to make down payments before orders are processed.

Answer 24

Advances from Customers

Question 25

These represent obligations, which have been incurred but not yet paid.

Answer 25

Accrued Expenses

Question 26

This comprises borrowings and other sources of funds. This item also represents long-term debts and is usually secured by land, buildings , or equipment.

Answer 26

Mortgage Payable

Question 27

When a large amount of long –term debt is sought by the firm from a large number of creditors, bonds are usually issued. 

Answer 27

Bonds Payable

Question 28

Awareness of the environment where the business operates provides a better perspective to the one making decisions relating to the finance function.

Answer 28

Financial Markets

Question 29

It refers to lending by ultimate borrowers with no intermediary.

Answer 29

Direct Finance

Question 30

refers to the selling of securities by private negotiation directly to insurance companies, commercial banks, pension funds, large –scale corporate investors, and wealthy individual investors.

Answer 30

Private Placement

Question 31

is one who acts an intermediary between buyers and sellers but does not take tile to the securities traded.

Answer 31

Broker

Question 32

is one who is in the security business acting as a principal rather than an agent. The dealer buys for his account a

Answer 32

Dealer

Question 33

refers to lending by an ultimate lender to a financial intermediary that then relends to ultimate borrowers.

Answer 33

Indirect Finance

Question 34

Classification of Financial Markets

Answer 34

1. Primary market  2. secondary market  3. money market  4. capital market  5. bond market  6. stock market 

Question 35

Four P's

Answer 35

Product Price Promotion Place

Question 36

Four C's

Answer 36

Customer Solution Consumer Cost Communication Convenience

Question 37

The Celling Concept

Answer 37

FACTORY - EXISTING PRODUCTS - SELLING AND PROMOTION - PROFITS THROUGH SALES VOLUME

Question 38

The Marketing Concept

Answer 38

MARKET - CUSTOMER NEEDS - INTEGRATED MARKETING - PROFITS THROUGH CUSTOMER SATISFACTION

Question 39

The analysis, planning, implementation, and control of programs designed to create, build, and maintain beneficial exchanges with target buyers for the purpose of achieving organization objectives.

Answer 39

Marketing Management

Question 40

describe basic human requirements.

Answer 40

Needs

Question 41

are shaped by one’s society.

Answer 41

Wants

Question 42

are wants for specific products backed by ability to pay. examples

Answer 42

Demands

Question 43

is a trade between two parties that involves at least two things of value, agreed-upon conditions a time of agreement, and a place of agreement.

Answer 43

Transaction

Question 44

is the act of obtaining a desired object from someone by offering something in return.

Answer 44

Exchange

Question 45

The process of creating, maintaining, and enhancing strong, value-laden relationships with customers and other stakeholders.

Answer 45

Relationship Marketing

Question 46

Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfying a want or need. It includes physical objectives, services, persons, places, organizations and ideas.

Answer 46

Product

Question 47

any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything.

Answer 47

Service

Question 48

Marketing Philosophies

Answer 48

The production concept The product concept The selling concept The marketing concept The societal marketing concept

Question 49

Consumers prefer products that are widely available and inexpensive

Answer 49

Production Concept

Question 50

Consumers favor products that offer the most quality, performance, or innovative features

Answer 50

Product Concept

Question 51

Consumers will buy products only if the company aggressively promotes/sells these products

Answer 51

Selling Concept

Question 52

Focuses on needs/ wants of target markets & delivering value better than competitors

Answer 52

Marketing Concept