AQA • WGU

Business finance - Which area of finance deals with sources of funding and the capital structure of corporations and seeks to increase the value of a firm to its owners? Finance focuses on the future, while accounting is generally backward-looking. - What is the primary difference between finance and accounting? Investments - Which subspecialty of finance primarily involves deciding which assets will create more wealth and earn positive returns? Investments - An area of finance that deals ...

1 What is the primary goal of the financial manager of a firm? - To maximize owner wealth 3 What is the primary aim of personal finance goals? - To maximize satisfaction from products purchased and services obtained 3 Which subspecialty of finance primarily involves deciding which assets will create more wealth and earn positive returns? - Investments A company calculated variances of a budget and actual cash flows that indicate the firm's strengths and weaknesses in cash flows and its...

How is risk defined in finance? - The possibility that the realized or actual return will differ from what we expect. (Risk is defined a s the possibility that the realized or actual return will differ from our expected return.) The nominal interest rate of an investment is 8%, and the inflation rate is 3%. What is the real interest rate? - 5% (Real Rate = Nominal Rate - Inflation, so 8% - 3% = 5%) What is another name for the cost of capital? - Discount rate What is the name for the minim...

Accounts Receivable Turnover (AR Turnover) - An activity ratio found by credit sales divided by accounts receivable. Average Collection Period (ACP) - An activity ratio found by the number of days in a year (365) divided by AR turnover. Current Ratio - A liquidity ratio found by current assets divided by current liabilities. Current ratio - Which ratio helps an analyst evaluate whether a company can cover its short-term obligations? Debt Ratio - A financing ratio found by total liabilitie...

Accounts Receivable Turnover (AR Turnover) - An activity ratio found by credit sales divided by accounts receivable. Average Collection Period (ACP) - An activity ratio found by the number of days in a year (365) divided by AR turnover. Current Ratio - A liquidity ratio found by current assets divided by current liabilities. Current ratio - Which ratio helps an analyst evaluate whether a company can cover its short-term obligations? Debt Ratio - A financing ratio found by total liabilitie...

Accounts Receivable Turnover (AR Turnover) - An activity ratio found by credit sales divided by accounts receivable. Average Collection Period (ACP) - An activity ratio found by the number of days in a year (365) divided by AR turnover. Current Ratio - A liquidity ratio found by current assets divided by current liabilities. Current ratio - Which ratio helps an analyst evaluate whether a company can cover its short-term obligations? Debt Ratio - A financing ratio found by total liabilitie...

Accounts Receivable Turnover - An activity ratio found by credit sales divided by accounts receivable. Activity Ratios - A category of ratios that measure how well a company uses its assets to generate sales or cash, showing the firm's operational efficiency and profitability. Average Collection Period - An activity ratio found by the number of days in a year (365) divided by AR turnover. Benchmarking - The process of completing a financial analysis to compare a firm's financial perform...

Accounting - The system of recording, reporting, and summarizing past financial information and transactions. Accounts Receivable Turnover (AR Turnover) - An activity ratio found by credit sales divided by accounts receivable. Activity Ratios - A category of ratios that measure how well a company uses its assets to generate sales or cash, showing the firm's operational efficiency and profitability. Additional Funds Needed (AFN) - Another name for the discretionary financing needed or exte...

Accounting - The system of recording, reporting, and summarizing past financial information and transactions. Accounts Receivable Turnover (AR Turnover) - An activity ratio found by credit sales divided by accounts receivable. Activity Ratios - A category of ratios that measure how well a company uses its assets to generate sales or cash, showing the firm's operational efficiency and profitability. Additional Funds Needed (AFN) - Another name for the discretionary financing needed or exte...

AR Turnover - Is an activity/asset management ratio. Helps to identify how quickly these accounts receivables turn over during a given year. A rate of 12 indicated that the company is collecting once a month. If less or decreasing then it may indicate that the company is taking longer to collect. Credit Sales/Accounts Receivable Average Collection Period (ACP) - Is an activity ratio. Convert AR turnover into a day count measure. 365/AR Turnover Current Ratio - Is a liquidity ratio. Short-t...