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ABM1 > Fundamental Concepts and Tools of Business Finance > Flashcards

Fundamental Concepts and Tools of Business Finance Flashcards

1
Q

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

A

Finance

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2
Q

deals with the revenue and expenditure patterns of the government

A

Public Finance

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3
Q

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

A

Private Finance

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4
Q

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

A

Personal Finance

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5
Q

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

A

Finance of non-profit organization

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6
Q

It refers to the provision of money for commercial use.

A

Business Finance

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7
Q

The Goals of Business Finance

A
  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.
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8
Q

Concerned with Business Finance

A

Small Business Finance
Corporation Finance
Multinational Finance

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9
Q

2 type of Finance

A

Public Finance
Private Finance

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10
Q

Means realizing the highest possible peso or dollar income.

A

Maximizing Profit

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11
Q

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

A

Time value of money

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12
Q

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

A

Firm

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13
Q

Are those that present financial information to various interested parties.

A

Financial Statement

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14
Q

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.

A

The balance sheet

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15
Q

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

A

Assets

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16
Q

Type of Assets

A

Current Assets
Trade Investment
Fixed Assets
Intangible Assets

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17
Q

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;

A

Current Assets

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18
Q

These are composed of investments in subsidiary or associated companies;

A

Trade Investment

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19
Q

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;

A

Fixed Assets

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20
Q

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

A

Intangible Assets

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21
Q

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

A

Liabilities

22
Q

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.

A

Account Payable

23
Q

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

A

Loans and Notes Payable

24
Q

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

A

Advances from Customers

25
Q

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

A

Accrued Expenses

26
Q

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

A

Mortgage Payable

27
Q

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

A

Bonds Payable

28
Q

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

A

Financial Markets

29
Q

It refers to lending by ultimate borrowers with no intermediary.

A

Direct Finance

30
Q

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.

A

Private Placement

31
Q

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

A

Broker

32
Q

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

A

Dealer

33
Q

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

A

Indirect Finance

34
Q

Classification of Financial Markets

A
  1. Primary market
  2. secondary market
  3. money market
  4. capital market
  5. bond market
  6. stock market
35
Q

Four P’s

A

Product
Price
Promotion
Place

36
Q

Four C’s

A

Customer Solution
Consumer Cost
Communication
Convenience

37
Q

The Celling Concept

A

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

38
Q

The Marketing Concept

A

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

39
Q

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.

A

Marketing Management

40
Q

describe basic human requirements.

A

Needs

41
Q

are shaped by one’s society.

A

Wants

42
Q

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

A

Demands

43
Q

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.

A

Transaction

44
Q

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

A

Exchange

45
Q

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

A

Relationship Marketing

46
Q

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.

A

Product

47
Q

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

A

Service

48
Q

Marketing Philosophies

A

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

49
Q

Consumers prefer products that are
widely available and inexpensive

A

Production Concept

50
Q

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

A

Product Concept

51
Q

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

A

Selling Concept

52
Q

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

A

Marketing Concept

ABM1 (6 decks)

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