Unit 1 Introduction to Financial Management Flashcards
What is financial management?
The process of planning, organizing, controlling and
monitoring financial resources with a view to achieve organizational goals and
objectives
What is accounting?
The process of identifying, measuring, recording and
communicating financial information to assist users to make decisions
What is finance?
A function that examines how companies source
funding and informs how that money is invested
Two areas of finance
Investments/Asset Pricing: focuses on the view of the investor
Corporate Finance: which focuses on an entity and its management
Why is finance important in financial management?
Maximize shareholder wealth/value through appropriate resource utilization and decision making (What to spend, where to spend, what projects to invest in)
What is tax?
A compulsory financial charge, or some other type of levy imposed on a
taxpayer, by a governmental organization in order to fund government spending
and various public expenditures
Three different types of information in accounting
Financial
Management
Social and environmental
GAAP
Generally Accepted Accounting Principles
What does an annual report include?
Contains descriptive information about the
company and the three key financial statements, together with a
wide range of additional information about the company provided in
the notes
Three key financial statements
Balance sheet
Income statement
Cash flow statement
Balance sheet
Shows the financial position of an
enterprise at a particular point in time
Income statement
Shows the financial performance of
an enterprise over a period of time (P&L statement)
Cash flow statement
Shows the cash inflows and outflows of an enterprise over a
period of time
The elements of B/S
Assets
Liabilities
S/E
The elements of I/S
Revenues and expenses
