Managing the Finance Function

Question 1

An important management responsibility that deals with the procurement and administration of funds with the view of achieving the objectives of the business

Answer 1

Finance function

Question 2

Process Flow of Finance Function

Answer 2

1) Determination of Fund Requirements

2) Procurement of Funds

3) Effective and Efficient Use of Funds

Question 3

Specific Fund Requirements

Answer 3

a) to finance daily operations
b) to finance the firm’s credit services
c) to finance the purchase of inventory
d) to finance the purchase of major assets

Question 4

Financing Daily Operations

Answer 4

a) wages
b) rent
c) taxes
d) power and light
e) marketing expenses
f) administrative expenses

Question 5

Sources of Funds (Cash inflows)

Answer 5

a) Cash Sales
b) Collection of Account Receivables
c) Loans and Credits
d) Sales of Assets
e) Ownership Contributions
f) Advances from customers

Question 6

Supplies of Short-term Funds

Answer 6

a) trade creditors
b) commercial banks
c) commercial paper houses
d) financial companies
e) factors
f) insurance companies

Question 7

Long-term Sources of Funds

Answer 7

a) long-term debts
b) common stocks
c) retained earnings

Question 8

Factors to Consider in determining the Best Source of Financing

Answer 8

a) flexibility
b) risk
c) income
d) control
e) timing
f) other factors like collateral values, flotation costs, speed, and exposure

Question 9

Indicators of Financial Health

Answer 9

a) Balance Sheet
b) Income Statement
c) Statement of changes in financial position

Question 10

Types of Risks

Answer 10

a) Pure Risk
b) Speculative Risk

Question 11

An organized strategy for protecting and conserving assets and people

Answer 11

Marketing Strategy

Question 12

Methods of Dealing with Risks

Answer 12

a) the risk may be avoided
b) the risk may be retained
c) the hazard may be reduced
d) the loses may be reduced
e) the risk may be shifted