Lecture 1
What is financial management?
Managing financial resources to achieve business goals
What are financial goals?
Measurable business objectives (e.g., revenue growth).
What is the 50/30/20 budgeting rule?
Needs 50%, Wants 30%, Savings 20%
What is inflation?
The rise in prices over time, reducing money’s value
What are the fundamental theories?
• Investment Portfolio Theory (Markowitz, 1952)
• Capital Structure Theory (Modigliani & Miller, 1958)
What are KPIs?
Metrics for evaluating financial performance.
What does APR stand for?
Annual Percentage Rate
What does "diversification" mean in investing?
Spreading investments to reduce risk
What functions does financial management perform?
Planning, control, asset and investment management, risk management.
What are SMART criteria?
Specific, Measurable, Achievable, Relevant, Time-bound.
What is compound interest?
Interest on both the initial amount and earned interest
What is the difference between a stock and a bond?
Stock = Ownership, Bond = Loan
What are the main activities of a financial manager?
Financial analysis, investment planning, cash flow management.
How to calculate the liquidity ratio?
Current ratio = Current Assets / Current Liabilities.
What is an emergency fund used for?
Unexpected expenses like medical bills or car repairs
What is a retirement fund like a 401(k) or IRA used for?
Saving money for retirement with tax benefits
What are the main revenue sources in hotels?
Room bookings (70%), restaurants, bars, events.
What are the steps to setting financial goals?
Analyze, prioritize, set SMART goals, align with strategy.
What is the main purpose of a credit score?
To assess a person’s creditworthiness
Why is it important to start investing early?
More time for compound interest to grow wealth