Fundamentals of Finance & Roles
Question: What is the term for the strategic process of planning, organizing, directing, and controlling an organization's financial activities to achieve its goals?
Answer: Financial Management.
Question: What inventory management method ensures older stock is sold or used first to minimize product expiration and waste?
Answer: First-In, First-Out (FIFO).
Question: True or False: Financial forecasting is primarily used to record exact historical financial transactions from the previous fiscal year.
Answer: False (It projects future performance)
Question: A restaurant chain installs backup power generators and conducts staff safety training. What type of business risk are they managing?
Answer: Operational Risk.
Question: Which Philippine regulatory body oversees banks and maintains national monetary stability?
Answer: Bangko Sentral ng Pilipinas (BSP)
Question: Which executive role oversees all financial operations, evaluates financial implications of business decisions, and aligns them with long-term goals?
Answer: Chief Financial Officer (CFO) or Vice President for Finance.
Question: What accounting term refers to short-term money owed to a business by its credit customers?
Answer: Accounts Receivable.
Question: Which forecasting approach builds revenue projections starting from micro operational roots like individual sales rep capacity and average deal size?
Answer: Bottom-Up Forecasting.
Question: Buying insurance to pass potential financial losses onto an external company is an example of which risk management strategy?
Answer: Risk Transfer.
Question: Which Philippine agency regulates corporations, public stock market listings, and the securities industry?
Answer: Securities and Exchange Commission (SEC).
Question: Which financial professional is responsible for managing internal accounting, tax compliance, budget reports, and financial statements?
Answer: Controller.
Question: What dividend policy pays a conservative fixed dollar amount regularly, plus a bonus payout when the company achieves exceptionally high earnings?
Answer: Combination Dividend Policy (Low Regular + Extra).
Question: Which short-term cash flow forecasting method uses actual scheduled cash receipts and payments for a 1-to-3-month horizon?
Answer: Direct Method.
Question: If a tech startup funds its expansion by issuing stock to the public and securing government grants, are they using internal or external sources of funds?
Answer: External Sources.
Question: What type of financial instrument grants partial ownership rights and legal claims to profits in an issuing company?
Answer: Shares (or Stocks).
Question: Which financial officer deals with external parties to obtain loans, manage investments, and plan the company's capital structure?
Answer: Treasurer.
Question: What term describes portion of net profits kept inside the company for growth rather than paid out as dividends?
Answer: Retained Earnings.
Question: Which budgeting approach starts every expense line item at zero each period, requiring every cost to be newly justified?
Answer: Zero-Based Budgeting.
Question: What risk management strategy completely halts or avoids a business activity to eliminate associated threats?
Answer: Avoidance (or Risk Avoidance).
Question: Which financial market facilitates physical or virtual trading of natural resources such as oil, corn, and gold?
Answer: Commodities Market.
Question: In corporate finance, what does "WACC" stand for, which represents the overall average return required by both lenders and investors?
Answer: Weighted Average Cost of Capital.
Question: If a business uses high fixed costs in its daily operations rather than variable costs, what type of leverage is it employing?
Answer: High Operating Leverage.
Question: What is the formula for calculating Net Cash Flow in a monthly cash flow statement?
Answer: Net Cash Flow = Total Cash Flow Inflows - Total Cash Outflows
Question: If expected sales are 2,000 units, target ending inventory is 600 units, and beginning inventory is 400 units, how many units must be produced?
Answer: 2,200 units (Required Production = 2,000 + 600 - 400).
Question: What derivative contracts allow customization between parties to hedge risks, unlike standardized futures contracts?
Answer: Forward Contracts.