Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Business Finance > Finance > Flashcards

Finance Flashcards

Finance (60 cards)

Start Studying
1
Q

Profitability

A

The ability of a business to generate and maximise profits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Liquidity

A

The ability of the business to meet its short-term . financial commitments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Efficiency

A

The ability of the business to make the most of its resources

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Growth

A

The ability of the business to expand in the long-term

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Solvency

A

The ability of a business to meet its long-term financial commitments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

INTERNAL FINANCE (2)

A

Retained profits, owners equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

(Int. Finance) Retained profits

A

profits not paid out as dividends to shareholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

(Int. Finance) Owner’s equity

A

money contributed by the owners (including shareholders)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

SHORT-TERM DEBT FINANCE (3)

A

Bank overdrafts, commercial bills, factoring

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

LONG-TERM DEBT FINANCE (4)

A

Mortgages, Debentures, unsecured notes, leasing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

(Short Debt Fin.) Bank overdrafts (3)

A

Withdraw more money from account than it contains, cost in the form of interest, good for short-tern liquidity problems

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

(Short Debt Fin.) Commercial Bills (2)

A

A bill of exchange used for large amounts of money (over 100K) issued by non bank institutions, cost in interest and principal amount

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

(Short Debt Fin.) Factoring (4)

A

Short-term borrowing involving selling accounts receivable, usually receives about 90% within 48 hours, charges fee, greater risk/higher costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

(Long Debt Fin.) Mortgages (2)

A

Loan secured by property of borrower, regular repayments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

(Long Debt Fin.) Debentures (2)

A

Fixed rate of interest, assets as collateral

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

(Long Debt Fin.) Unsecured notes (2)

A

Loan from investors, high interest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

(Long Debt Fin.) Leasing (2)

A

Operating- short-term

Financial- purchasing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

EQUITY FINANCE (2)

A

Ordinary shares, private equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

(Eq. Fin.) Ordinary shares

A

Purchased on ASX

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

(Eq. Fin.) Private Equity (2)

A

Purchase of shares in a private company OR investments made by the owner of unincorporated businesses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

FINANCIAL INSTITUTIONS (7)

A

BUF SAIL:

Banks, Unit trusts, finance companies, superannuation funds, ASX, Investment banks, life insurance companies

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

(Fin. Inst.) Banks (4)

A

Provide working capital, investment portfolio management, overseas management, advice

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

(Fin. Inst.) Finance companies (3)

A

Lease finance, debentures, added security

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

(Fin. Inst.) Life insurance companies

A

Funds received via premiums

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
(Fin. Inst.) Superannuation funds (2)
Retirement dosh, able to invest in long-term securities
26
(Fin. Inst.) Unit trusts
Money from lots of small investors
27
(Fin. Inst.) ASX
Oversees all transactions in public companies
28
INFLUENCE OF GOVERNMENT (2)
ASIC, Company Tax
29
(Gov.) ASIC
Ensures that companies adhere to investment laws, Corporations Act since 1998
30
(Gov.) Company Tax (2)
Flat tax rate of 30%, systematically reduced to attract foreign investment
31
GLOBAL MARKET INFLUENCES (3)
Global economic outlook, availability of funds, interest rates
32
(Global Market Inf.) Global economic outlook (2)
Positive- increased export demand, cheaper overseas finance | Negative- decreased export demand, more expensive overseas finance
33
(Global Market Inf.) Availability of funds (4)
Risk, demand/supply, economic conditions in source country | e.g. GFC
34
(Global Market Inf.) Interest rates
Higher in Australia
35
PLANNING AND IMPLEMENTING (5)
Financial needs, budgets, record systems, financial risk, financial controls
36
(Plan & Imp.) Financial needs
Determined by: | Size, phase in business life cycle, future plans
37
(Plan & Imp.) Budgets
Signal strengths/weaknesses
38
(Plan & Imp.) Record systems
Double entry system
39
(Plan & Imp.) Financial risk
Unable to cover financial obligations e.g. debt
40
(Plan & Imp.) Financial controls
Theft, fraud, damage, errors, etc
41
Debt financing advantages (3)
Readily available, tax deduction for interest payments, cheaper in the long-term
42
Debt financing disadvantages (3)
Interest, collateral, expensive in short-term
43
Equity financing advantages (4)
No repayment, no interest, low gearing, less risk
44
Equity financing disadvantages (2)
Financer is entitled to profits, expensive long-term
45
FINANCIAL STATEMENTS (3)
Income, cash flow, balance
46
FINANCIAL RATIOS (7)
Current, gearing, gross, net, return on equity, expense, accounts receivable turnover
47
(Ratio) Current
Liquidity, 2:1, HIGHER is better
48
(Ratio) Gearing
Solvency, 0.5-0.7:1, LOWER is better
49
(Ratio) Gross profit
Profitability, 50%, HIGHER is better
50
(Ratio) Net profit
Profitability, 10-18%+, HIGHER is better
51
(Ratio) Return on equity ratio
Profitability, 12-17%+, HIGHER is better
52
(Ratio) Expense
Efficiency, LOWER is better
53
(Ratio) Accounts receivable turnover
Efficiency, 30 or less, HIGHER is better
54
LIMITATIONS OF FINANCIAL REPORTS (5)
Normalised earnings, capitalised expenses, valuing assets, timing issues, debt repayments
55
(Lim.) Normalised earnings
Removal of a one-off purchase
56
(Lim.) Capitalised expenses
Financing a non-current asset
57
(Lim.) Valuing assets
Original/historical cost, depreciated/appreciated cost
58
(Lim.) Timing issues
Seasonal issues, recording revenues before their due
59
(Lim.) Debt repayments
Debts
60
Ethical Issues
Legislation, ASX requirements

Business Finance (6 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions