Introduction to Finance Flashcards
What is finance?
Broad terms that describes activities associated with banking, leverage or debt, credit, capital markets, money and investments
What does finance represent?
Money management and the process of acquiring needed funds
Why is finance important?
For evaluating working capital financing because it gives you the tools and information to asses how much money you need and the best way to get it
What is the objective of financial management?
To maximise the value of the firm and attempting to reduce the cost of finance
What are non-current assets?
Assets that last a long time, e.g. buildings
Can either be tangible or intangible
What are current assets?
Assets that last a short time, e.g. inventory
What are current liabilities?
Short-term debt that represents loans and other obligations that must be repaid within one year
What are non-current liabilities?
Long-term debt that represents debt that doesn’t have to be repaid within one year
What does shareholders’ equity represents?
The difference between the value of the assets and the liabilities of the firm
Who buys debt from firms?
Creditors, bondholders or debt holders
Who are the holders of equity?
Shareholders
Who reports to the chief financial officer?
Treasurer and the financial controller
What does the treasurer do?
Responsible for handling cash flows, managing capital expenditure decisions and making financial plans
What does the financial controller do?
Handles the accounting function, which includes taxes, financial and management accounting, and information systems
What is the most important job of a financial manager?
To create value from the firms capital budgeting, financing and net working capital activities
