LONG ROOM
Name ONE advantage to debt financing
Funds are available quickly
Interest payments are tax deductible
Flexible payment periods
Existing ownership of the business
What does a balance sheet show
A business has
12000 in current assets
8000 in current liabilities
What is their current ratio?
1.5:1
What is money invested in a company that is not listed on the ASX. Normally wealthy people called ‘HIGH NETWORTH PEOPLE’ who look for a return on their investment in 3-5 years.
Private equity
What is the ideal current ratio? And what does this mean
2:1 - means for every $1 in debt the business has $2 sitting there to pay it back
What is Cogs (not the formula)
Costs directly involved in the production of goods
What is the accounting equation that you would use on a balance sheet?
Assets = Liabilities + Owners Equity
Where would buildings sit on a balance sheet
A business has:
Cash at the start of the month of June of 20000
then:
Inflows of 10000
Outflows of 10000
What is their cash at the start of July?
20000
Which monitoring tool measures the inflows and outflows of cash?
Cash flow statement
How many of the finanical ratios are actually a ratio
1
Name the 3 monitoring tools used in Finance by a business?
Balance Sheets
Cash Flow Statements
Income Statements
Name disadvantage of debt financing
Security is required
Interest interest rate if variable
Reg repayments
Expensive
The current ratio
How much do companies pay in tax?
This rate is 30% unless turnover is under $50 million, then it is 26%
What is Mrs Neilson fav F word?
Factoring
Debentures are:
Debt or Equity?
Internal or External?
Short or Long term?
Debt
External
Long Term
What are the FIVE objectives of financial management
profitability, growth, efficiency, liquidity, solvency
If sales are 10000 and COGS is 11000 what is my gross profit?
-1000
Name 3 financial institutions
Banks
Investment Banks
Finance Banks
Super Funds
Life Insurance
Unit Trusts
ASX
Name the TWO primary regulatory bodies in regards to 'influence of the government'
ASIC
ATO
Where would a bank overdraft sit on a balance sheet?
Under current liabilities (or right hand side if I am in a good mood)
Commercial Bills are:
Debt or Equity?
Internal or External?
Short or Long term?
Debt
External
Short Term
Name the FULL formula you need when looking at income statements statements
sales - cogs = gross profit
gross profit - expenses = net profit
What is the difference between a current and non current liability
current - expected to be paid off within the year
non current - will take longer than a year to pay off