Financial Management UPDATED Exam Questions and CORRECT Answers
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Course
Financial management
Institution
Financial Management
Financial Management UPDATED Exam
Questions and CORRECT Answers
Finance - CORRECT ANSWER- Finance: the process of transferring money from
savers to borrowers through financial markets/institutions.
Difference Subject Areas in Finance - CORRECT ANSWER- Investment (Savers)
Corporate Finance (B...
Financial Management UPDATED Exam
Questions and CORRECT Answers
Finance - CORRECT ANSWER- Finance: the process of transferring money from
savers to borrowers through financial markets/institutions.
Difference Subject Areas in Finance - CORRECT ANSWER- Investment (Savers)
Corporate Finance (Borrowers)
Financial Markets & Institutions (Intermediaries)
3 main forms of business organizations with bonus - CORRECT ANSWER- There are three
main forms of business organizations:
1. Sole Proprietorship
2. Partnership
3. Corporations
Limited liability Companies (LLC) is hybrid between partnership and corporation.
Proprietorship and Partnership Adv and Dis - CORRECT ANSWER- Advantages:
Easy to form
Few regulations
Lower tax
Disadvantages:
Unlimited liability
Limited life
Difficult to raise capital
Corporation Adv. and Disadvantage - CORRECT ANSWER- Advantages:
1. Limited liability
2. Unlimited life
3. Easy to raise capital
, Disadvantages:
1. Hard to form
2. More regulations
3. High tax
4. Agency problem
Finance within a corporation - CORRECT ANSWER-
What is management's primary goal? - CORRECT ANSWER- Maximize the wealth of
stakeholders in a socially responsible way so that the wealth is maximized long term
Getting Capital - CORRECT ANSWER- IPO with underwriter and issuing secondary stock
difference in 3 financial statements - CORRECT ANSWER- Income statement - summarizes
a firm's revenues and expenses over a given period of time.
Balance sheet - provides a snapshot of a firm's financial position at one point in time.
Statement of cash flows - reports the impact of a firm's activities on cash flows over a given
period of time.
Difference between sales and expenses - CORRECT ANSWER- Profit
What kind of income statements - CORRECT ANSWER- Income Statement: usually you will
find annual and quarterly income statement for a public firm (Profit and Loss Statement)
What does accounting provide us with - CORRECT ANSWER- historical health of company
Income Statement - CORRECT ANSWER- Net Sales
- Cost of Goods Sold (COGS)
= Gross Profit
- Operating Expenses (exclude Depreciation)
- Depreciation Expenses
= Operating Profit (EBIT)
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