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BUS FIN > Midterms > Flashcards

Midterms Flashcards

1
Q

system that enables lenders and borrowers to exchange funds

A

Financial system

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2
Q

it links the savers and the users of funds

A

Financial system

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3
Q

households, individuals, companies, government agencies, or any other entity whose cash inflows are greater than their cash outflows

A

savings

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4
Q

provides a mechanism by which these savings can be channeled to users of funds, borrowers, and investors

A

financial intermediaries

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5
Q

provide mechanism where savers can put their excess funds through deposits, which will earn interests as incentives

A

Banks

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6
Q

lend the money to borrowers after performing a credit investigation

A

Banks

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7
Q

serve as conduits of investors in buying and selling both government securities and corporate bonds.

A

Banks

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8
Q

offer different products, which may be broadly categorized into life insurance and non-life insurance products.

A

Insurance companies

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9
Q

Insured pays this to insurance companies

used to fund claims

A

premiums

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10
Q

provides a system for the trading of equity securities of publicly listed companies.

A

Philippine Stock Exchange (PSE)

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11
Q

equity securities

A

common stocks and preferred stocks.

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12
Q

links individuals to PSE

A

Stock Brokerage Firms

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13
Q

Types of Stock Brokerage Firms

A

Online brokers

Live brokers

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14
Q

one can trade in the stock market through the Internet.

A

Online brokers

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15
Q

one needs a telephone to call brokers and place orders.

A

Live brokers

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16
Q

provide opportunities for big and small investors to invest in financial instruments which they would not have considered on their own, or they may have considered but do not have the time or the expertise to do it including investments in the stock market, bonds, treasury notes, and other money market instruments like treasury bills.

A

Mutual funds

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17
Q

who invests funds for a fee

A

Fund Managers/ Professional Managers

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18
Q

What different INVESTMENT OBJECTIVES do mutual funds cater to?

A

limited only to stocks
restricted to fixed income instruments
both

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19
Q

GSIS

A

Government Service Insurance System

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20
Q

SSS

A

Social Security System

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21
Q

UITF

A

Unit Investment Trust Fund

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22
Q

investing in the stock market has to be coursed through______

A

stock brokerage firms.

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23
Q

forms of evidence regarding the executed buy or sell transaction that a client placed with his/her broker

A

confirmation receipts

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24
Q

protect the insured from loss of life

A

Life insurance products

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25
Q

protect the insured from the loss of or damage to properties.

A

non-life insurance products

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26
Q

the highest policy-making body in a corporation

A

Board of Directors

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27
Q

Setting policies on investments, capital structure, and dividends;
Approving company’s strategies, goals, and budgets;
Appointing and removing members of the top management including the president;
Determining top management’s compensation; and
Approving the information and other disclosures reported in the financial statements.

A

Board of Directors

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28
Q

to ensure that the corporation is operating to serve the best interest of the stockholders

A

board’s primary responsibility

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29
Q

elected by the stockholders

A

Directors

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30
Q

Overseeing the operations of a company and ensuring that the strategies as approved by the board are implemented as planned;
Performing all areas of management: planning, organizing, staffing, directing, and controlling; and
Representing the company in professional, social, and civic activities.

A

President

31
Q

Formulating marketing strategies and plans;
Directing and coordinating company sales;
Performing market and competitor analysis;
Analyzing and evaluating the effectiveness and cost of marketing methods applied;
Conducting or directing research that will allow the company to identify new marketing opportunities, for example, variants of the existing products/services already offered in the market; and
Promoting good relationships with customers and distributors.

A

VP for Sales & Marketing

32
Q

Ensuring production meets customer demands;
Identifying production technology/process that minimizes production cost and makes the company cost competitive;
Coming up with a production plan that maximizes the utilization of the company’s production facilities; and
Identifying adequate and competitively priced raw material suppliers.

A

VP for Production

33
Q

Coordinating the functions of administration, finance, and sales and marketing departments;
Assisting other departments in hiring employees;
Providing assistance in payroll preparation;
Determining the location and the maximum amount of office space needed by the company; and
Identifying means, processes, or systems that will minimize the operating costs of the company.

A

VP for Administration

34
Q

Helping to determine how much cash dividends a company should declare

  • Financing
  • Operating
  • Investing
  • Dividend Policies
A

VP for Finance

35
Q

provides information regarding the liquidity position and capital structure of a company as of a given date.

A

Statement of Financial Position

36
Q

refers to the ability of a company to pay maturing obligations

A

Liquidity

37
Q

provides information regarding the amount of assets financed by debt or liabilities and equity.

A

Capital structure

38
Q

Previous Name of Statement of Financial Position ( 2009 )

A

Balance Sheet

39
Q

provides information regarding the revenues or sales, expenses, and net income of a company over a given accounting period, a period which may be for a month, a quarter, or a year.

A

The Statement of Profit or Loss

40
Q

Previous Name of The Statement of Profit or Loss

A

Income Statement

41
Q

two options in presenting the Statement of Profit or Loss:

A

The first option is to present it as a separate financial statement; and
The second option is to present it together with other comprehensive income (OCI)

42
Q

represents transactions that are not reported in the profit or loss statement but affects the stockholders’ equity.

A

other comprehensive income (OCI)

43
Q

provides an explanation regarding the change in cash balance from one accounting period to another.

A

The Statement of Cash Flows

44
Q

Cash Flows are classified into three main categories

A

Operating;
Investing; and
Financing.

45
Q

In the cash flows from operating activities, the income reported from the statement of profit or loss which is based on accrual principle is converted to cash.

A

Operating

46
Q

The cash flows from investing activities provide information regarding the future direction of the company; it shows how much investment the company is making over a given accounting period.

A

Investing

47
Q

The cash flows from financing activities provide information whether there is a proper matching of investing and financing activities.

A

Financing

48
Q

provides information that explains the changes in the stockholders’ equity account from one accounting period to another.

A

The Statement of Changes in Stockholders’ Equity

49
Q

The changes may be due to the following:

A

Profit or loss for the accounting period;
Cash dividend declaration;
Issuance of new shares of stocks; and
Other transactions that affect the stockholders’ equity such as other comprehensive income, treasury stocks, and revaluation of assets.

50
Q

What are the additional pieces of information that the NOTES TO FINANCIAL STATEMENTS provide?

A

Brief Description of the Company
Summary of Significant Accounting Policies
Breakdown of Amounts Found in the Financial Statements

51
Q

What are the USES of FINANCIAL STATEMENT ANALYSIS?

A

It is used for investment and credit decisions.
It is also used for regulating companies.
It used by management for monitoring performance.
It is used in identifying strategies to further improve the company’s operations.

52
Q

can be used by managers, equity investors, creditors, regulators, labor unions, employees, the public, and potential investors and creditors.

A

financial statement analysis

53
Q

Financial Ratios

A

Profitability ratios
Liquidity ratios
Leverage ratios
Efficiency ratios

54
Q

Different Profitability Ratios

A 
Return on Equity (ROE)
Return on Assets (ROA)
Gross Profit Margin
Operating Profit Margin
Net Profit Margin
55
Q

measures the amount of net income earned in relation to stockholders’ equity.

A

Return on Equity (ROE)

56
Q

measures the ability of a company to generate income out of its resources.

A

Return on Assets (ROA)

57
Q

is a profitability ratio that measures the ability of a company to cover its cost of goods sold from its sales.

A

Gross Profit Margin

58
Q

measures the amount of income generated from the core business of a company.

A

Operating Profit Margin

59
Q

measures how much net profit a company generates for every peso of sales or revenues that it generates.

A

Net Profit Margin

60
Q

computed as the difference between revenues and the sum of cost of revenues or sales and operating expenses.

A

Operating Profit Margin

61
Q

is the amount left after all expenses including income taxes are deducted from sales or revenues.

A

Net income

62
Q

Different Liquidity Ratios

A

Current Ratio

Acid-Test Ratio

63
Q

Acid-Test Ratio other term

A

Quick Asset Ratio

64
Q

stricter measure of a company’s liquidity position.

A

Acid-Test Ratio/ Quick Asset Ratio

65
Q

include cash and other assets which are expected to be converted to cash within 12 months such as accounts receivable and inventories.

A

Current assets

66
Q

include obligations that are expected to be settled or paid within 12 months such as accounts payable, accrued expenses payable such as accrued salaries, and current portion of long-term debt.

A

Current liabilities

67
Q

principal amount of a long-term loan expected to be paid within the next 12 months from the balance sheet date.

A

current portion of long-term debt

68
Q

Different Leverage Ratios

A

Debt Ratio
Debt to Equity Ratio
Interest Coverage Ratio

69
Q

measures how much of the total assets are financed by liabilities.

A

Debt Ratio

70
Q

a variation of the Debt Ratio

A

Debt to Equity Ratio

71
Q

provides information if a company has enough operating income to cover interest expense.

A

Interest Coverage Ratio

72
Q

show the capital structure of a company, that is, how much of the total assets of a company is financed by debt and how much is financed by stockholders’ equity.

A

leverage ratios

73
Q

stands for earnings before interest and taxes.

A

EBIT

BUS FIN (2 decks)

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