Role of financial management
Influences on financial management #1
Influences on financial management #2
Processes of financial management
General finance knowledge
100
What are the five objectives of Financial Management
profitability, growth, efficiency, liquidity, solvency
100
Identify and describe three internal sources of finance a business can use.
Owners equity Sales of unwanted assets Retained profits
100
What is the difference between equity and owners equity
equity is raising money through public or private shares. Owners equity is money contributed by the owner into the business
100
Identify the steps of financial planning
financial needs, budgets, record systems, financial risks, financial controls
100
What is the 'cost of goods sold' formula?
Opening stock (inventory) + purchases - closing stock (inventory)
200
Are tactical and operational plans short or long term objectives?
Short term objectives
200
Identify and describe 2 external short term debt sources of finance
Overdrafts Commercial bills Factoring
200
What is the current rate of company tax in Australia?
30%
200
Identify the three types of budgets
Operating Project Financial
200
Cash, receivables and inventories can be found where on the Balance Sheet?
Current Assets
300
What is the strategic role of a business?
strategies that are adopted by the business to achieve its short- and long-term objectives.
300
Identify and describe 2 external long-term sources of debt finance
Mortgage Debentures Unsecured notes Leasing
300
Why would interest rates be high during a GFC?
Due to the high level of risk associated with borrowing funds. Similarly, there is less available funds to borrow.
300
What is the term used when someone in the business records all items twice, the entries can be seen to balance, and checks to find errors can be carried out quickly.
"double entry system"
300
What is the difference between Accounts Payable and Accounts Receivable
A/R = Money that is owed to you (the business) A/P = Money that the business owes to others
400
What is the difference between Liquidity and Solvency?
Liquidity is the ability of the business to meet its financial obligation in the short term Solvency is the ability of the business to meet its financial obligation in the long run
400
Identify all the financial institutions in the financial market
– banks – investment banks – fi nance and life insurance companies – superannuation funds – life insurance companies – unit trusts – Australian Securities Exchange
400
Outline the role of ASIC (Australian Securities and Investment Commission)
The role of ASIC is to assist in reducing fraud and unfair practices in financial markets and financial products. ASIC ensures that companies adhere to the law, collects information about companies and makes it available to the public.
400
Identify three common causes of financial problems
• theft • fraud • damage or loss of assets • errors in record systems.
400
What is the accounting equation?
ASSETS = LIABILITIES + OWNERS EQUITY
500
Define Financial Management
is the planning and monitoring of a business’s financial resources to enable the business to achieve its financial goals.
500
Outline the role of the ASX as a primary and secondary market
Primary -the market where companies issue new shares to raise capital Secondary - the market where previously issued (second hand) shares are traded.
500
Explain how a low interest rate will benefit businesses.
A lower interest rate in an economy depicts positive economic outlook as the risk involved in borrowing money is low. Consequently, businesses will benefit from the lower cost in borrowing - the business is able to expand - such as takeovers, increasing production etc.
500
Outline two advantages and disadvantages of debt finance. Outline two advantages and disadvantages of equity finance.
ANSWERS MAY VARY
500
Cash $100 Accounts Payable $150 Accounts receivable $100 plant and equipment $200 equity $250
What is the balance on the balance sheet 400
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