Final

Question 1

financial management

Answer 1

spending&raising of a firms money

Question 2

cash flow through business

Answer 2

money in: cash sales, investment, borrowed funds, sale of fixed assets, collection of accounts
money out: purchase, payment

Question 3

financial manager responsibilities

Answer 3

• financial planning
• investment
• financing

Question 4

why business financially fail

Answer 4

• under-capitalization
• poor control over cash flow
• inadequate expense control

Question 5

goal of financial manager

Answer 5

maximize the value of the company

Question 6

risk and return factors

Answer 6

• changing patterns of market demand
• interest rates
• economic conditions
• marketing conditions
• social issues

Question 7

short term forecast

Answer 7

• operating plans for 1 year
• revenues
• cost of goods
• operating expense

Question 8

long term forecast

Answer 8

• strategic plans long than a year

- broader view of financial activities

Question 9

cash budget

Answer 9

forecast cash inflow/outflow

Question 10

capital budget

Answer 10

forecast outlays for fixed assets

Question 11

operating budget

Answer 11

forecast profits and expenses

Question 12

how organizations use cash(funds)

Answer 12

1. manage daily operations
2. manage credit
3. acquire inventory
4. capital expenditure

Question 13

debt financing

Answer 13

• no voting rights
• debt is ranked ahead of equity
• debt has a stated maturity
• interest is a deductible expense

Question 14

equity financing

Answer 14

• voting rights
• have claim on income
• not required to pay equity
• paid from after tax income

Question 15

trade credit

Answer 15

seller extends credit to buyer

Question 16

secured loan

Answer 16

backed by collateral

Question 17

unsecured loan

Answer 17

no collateral

Question 18

line of credit

Answer 18

given amount of unsecured funds; quick borrowing

Question 19

commercial paper

Answer 19

• unsecured promissory notes
• short term
• fixed amount + interest

Question 20

factoring

Answer 20

• sell accounts receivable for cash

- expensive

Question 21

term loan

Answer 21

• long term debt from a lending institution
• repaid in installments
• need collateral

Question 22

bonds

Answer 22

long term debt

Question 23

debenture bonds

Answer 23

an unsecured bond

Question 24

secured bonds

Answer 24

backed by collateral

Question 25

callable bond

Answer 25

repaid before maturity date

Question 26

convertible bond

Answer 26

can be converted into common shares

Question 27

mortgage loan

Answer 27

long term loan with real estate as collateral

Question 28

stocks

Answer 28

shares of ownership in a company

Question 29

retained earnings

Answer 29

profits reinvested back into the business

Question 30

venture capital

Answer 30

money that is invested in new companies that have immense profit potential

Question 31

leverage

Answer 31

amount of debt used to finance assets; more debt than equity is higher leveraged

Question 32

insurance policy

Answer 32

agreement of the risks covered

Question 33

insurable interest

Answer 33

insurance applicant's chance of loss if a particular peril occurs

Question 34

insurable risk

Answer 34

risk that can be covered

Question 35

types of insurance

Answer 35

- property - health - liability - life

Question 36

future of financial industry

Answer 36

-expanding role of CFO in companies

Question 37

social trends

Answer 37

social change influenced by attitudes, values, lifestyles that impact business

Question 38

social responsibility

Answer 38

responsibility a business has to its steakholders

Question 39

ethics

Answer 39

set of moral standards for judging whether something is right or wrong

Question 40

pyramid of corporate social responsibility

Answer 40

1. philanthropic 2. ethical 3. legal 4. economic(base of pyramid)

Question 41

4 primary reasons of ethical problems in business

Answer 41

1. personal gain and self interest 2. competitive pressure on profit 3. conflicts of interest 4. cross cultural contradictions

Question 42

ethical influence in organizations

Answer 42

- lead by example - ethics training - establish formal code of ethics - ethical decision making

Question 43

whistle blower

Answer 43

employee who reports misconduct or harmful or illegal acts by others in the organization

Question 44

ethical relativism

Answer 44

concept that holds that ethical behaviour should be defined by various periods in time in history, traditions, personal opinion

Question 45

preconventional development

Answer 45

children not old enough to understand whats right or wrong so they turn to their parents

Question 46

conventional development

Answer 46

begin to understand their role in social groups and society

Question 47

post conventional

Answer 47

think through ethical dilemmas on their own