Financial Management 101 Questions and Answers | Latest Version | 2024/2025 | Already Passed
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Course
Financial Management 101
Institution
Financial Management 101
Financial Management 101 Questions
and Answers | Latest Version | 2024/2025
| Already Passed
What is the main goal of financial management?
The main goal of financial management is to maximize the value of the firm for its
shareholders.
What is the difference between gross profit and ne...
Financial Management 101 Questions
and Answers | Latest Version | 2024/2025
| Already Passed
What is the main goal of financial management?
✔✔The main goal of financial management is to maximize the value of the firm for its
shareholders.
What is the difference between gross profit and net profit?
✔✔Gross profit is the revenue remaining after deducting the cost of goods sold, while net profit
is the amount left after all expenses, taxes, and costs are subtracted from total revenue.
What does a cash flow statement show?
✔✔A cash flow statement shows the inflows and outflows of cash within a business over a
specific period, indicating liquidity and cash management.
How do you define working capital?
✔✔Working capital is the difference between current assets and current liabilities, indicating a
company's short-term financial health.
1
,What is the purpose of financial forecasting?
✔✔Financial forecasting estimates future financial outcomes based on historical data and market
trends, helping in budgeting and planning.
What is a budget, and why is it important?
✔✔A budget is a financial plan that outlines expected revenues and expenses, helping
organizations manage resources effectively and achieve financial goals.
What is the significance of the time value of money?
✔✔The time value of money states that a dollar today is worth more than a dollar in the future
due to its potential earning capacity.
How do interest rates affect borrowing?
✔✔Higher interest rates increase the cost of borrowing, while lower rates make loans more
affordable, influencing investment decisions.
What is capital budgeting?
2
,✔✔Capital budgeting is the process of evaluating and selecting long-term investments that are
worth pursuing based on their potential returns.
What are fixed and variable costs?
✔✔Fixed costs do not change with the level of production, while variable costs fluctuate directly
with production volume.
What is the role of a financial analyst?
✔✔A financial analyst evaluates financial data, prepares reports, and provides insights to support
business decisions and strategies.
What does diversification mean in an investment context?
✔✔Diversification is the practice of spreading investments across various assets to reduce risk
and improve returns.
What is the purpose of financial ratios?
✔✔Financial ratios assess a company's performance and financial health by comparing different
financial statement items.
3
, How can companies manage financial risk?
✔✔Companies can manage financial risk through diversification, hedging, insurance, and
effective financial planning.
What is an income statement?
✔✔An income statement summarizes a company's revenues, expenses, and profits over a
specific period, providing insight into financial performance.
How do dividends work?
✔✔Dividends are payments made by a corporation to its shareholders, typically as a distribution
of profits, and can be in cash or stock.
Unit 1: Overview of DON Financial Management ✔✔
DON financial management consists of two core processes ✔✔1) resource management
2) financial operations
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