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MT_2B > Financial Management > Flashcards

Financial Management Flashcards

1
Q

If financial management is not manage well, what will happen?

A

Bankruptcy

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2
Q

The art and science of managing money

A

Finance

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3
Q

Allocation, Procurement and Efficient utilization of financial resources to enable a business concern to attain it’s predetermined objectives

A

Finance

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4
Q

Interrelated sub-areas of finance

A
  1. Money and capital market
  2. Investments
  3. Financial management
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5
Q

Area or set of administrative function in an organization which are related with arrangement of CASH AND CREDIT so that the organization may have the means to carry out its objective as satisfactorily as possible

A

Financial Management

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6
Q

Involves planning, directing, monitoring, organizing and controlling of the MONETARY RESOURCES OF THE ORGANIZATION

A

Financial Management

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7
Q

Pre-Determined Objectives

A
  • stockholder wealth maximization
  • Increasing its value as an economic entity
  • To improve the quality of life of the community (Social Responsibility)
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8
Q

Two groups under Organizational Goals

A
  1. Profitability
  2. Risk Control
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9
Q

Organizational Goals

A
  • Survive
  • Avoid distress and bankruptcy
  • Beat the competition
  • Maximize sales or market share
  • minimize cost
  • increase profit
  • maintain steady earnings growth
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10
Q

Scope of Financial Management

A
  1. Anticipation
  2. Acquisition
  3. Allocation
  4. Appropriation
  5. Assessment
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11
Q

Assessing the financial requirements of an organization

A

Anticipation

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12
Q

Estimate the financial needs of the company

A

Anticipation

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13
Q

collects finance for the company from different sources

A

Acquisition

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14
Q

Share capital, term loans, bonds

A

Acquisition

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15
Q

Uses this collected finance to purchase fixed and current assets for the company

A

Allocation

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16
Q

2 Types of Asses based on Allocation

A
  1. Fixed asset - permanent
    2 . Current assets - on hand, not permanent
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17
Q

Divides the company profit among the shareholders

A

Appropriation

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18
Q

It keeps a part of the profits as reserve

A

Appropriation

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19
Q

Controls all the financial activities of the company

A

Assessment

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20
Q

Important function of Management

A

Financial Forecasting/Planning

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21
Q

It means to establish the long term and short term financial needs of the company

A

Financial forecasting/planning

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22
Q

Refers to the cash which comes in and out of the business

A

Cash flow

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23
Q

The cash comes in mostly from?

A

Sales

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24
Q

The cash goes out for?

A

Business expenses

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25
Q

Sales forecasting and forecast the future operational expenses

A

Estimating and controlling cash flows

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26
Q

Function of Financial Management

A
  1. Financial Forecasting/Planning
  2. Estimating and Controlling Cash flow
  3. Investment Decision and Financial decision
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27
Q

Also referred as the CAPITAL BUDGET DECISION, simply means the decisions to acquire assets or to invest in a project

A

Investment Decision

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28
Q

Which yield a return over a period of time in future

A

Long Term Assets

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29
Q

Popularly known in financial literature as CAPITAL BUDGETING

A

Long Term Assets

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30
Q

Defined as those assets which in the normal course of business are convertible into without diminution in value, usually within a year

A

Short Term Asset (Current Asset)

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31
Q

The aspect of financial decision making with reference to current assets or short term assets is popularly termed as?

A

WORKING CAPITAL

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32
Q

Selection of an asset or investment proposal that would yield benefit in future

A

Capital Budgeting (Long Term Asset)

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33
Q

A capital expenditure normally requires a huge cash outlay for a project that is supposed to produce a cash inflow over a period of time exceeding one year

A

Capital Budgeting

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34
Q

Example of Capital Budgeting

A

Acquisition of a new CT-Scan machine
Expansion or setting up a Medical Arts Building
Land acquisition

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35
Q

Determine the viability and profitability of capital budget and investment decision

A

Tools for Capital Budgeting

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36
Q

Tools for Capital Budgeting

A
  • Net present value
  • Internal Rate of Return
  • Profitability Index
  • Payback Period
  • Return on Book Value
37
Q

is concerned with management of current assets

A

Working Capital Management

38
Q

It is an important and integral part of financial management as short-term survival is prerequisite for long term success

A

Working Capital Budgeting

39
Q

Goal of Working Capital Budgeting

A
  • Ensure that a firm is able to continue its operations
  • it has sufficient ability to satisfy both maturing short-term debt and upcoming operational expenses
40
Q

The management of working capital involves

A

Efficient Management of Inventories, Accounts receivable and payable, and Cash

41
Q

Assets which can be converted into cash within one year or less than one year

A

Current Assets

42
Q

Examples of this assets are cash, bills receivables, outstanding incomes

A

Current Assets

43
Q

Are those liabilities which can be paid to respective parties within one year or less than one year at their maturity

A

Current Liabilities

44
Q

It includes creditors, outstanding bills, bank overdraft, bills payable and short term loans, outstanding expenses

A

Current Liabilities

45
Q

It is concerned with financing mix or capital structure

A

Financing Decision

46
Q

Refers to the proportion of debt or fixed-debt sources of financing and equity capital employed by a firm to fund business operation, capital expenses and investments

A

Capital structure

47
Q

Funds paid by investors in exchange of stock

A

Equity Capital

48
Q

Loans from various sources like banks, financial institutions

A

Debt

49
Q

Capital put in by the investors who are also known as owners/shareholders

A

Equity

50
Q

The ownership rights in the company is based on?

A

Equity

51
Q

Example of this are common stock, preferred stock and retained earnings

A

Equity

52
Q

It addresses these questions:
- how much capital should be raised to fund the firms operation?
- what is the best mix of financing these assets?

A

Financing Decision

53
Q

Organization’s Financial Status is Expressed in Four Standard Reports:

A
  1. Balance Sheet
  2. Revenue and Expenses Statement
    3 Change in Fund Balance/net worth
    4 Cash Flows

(Components of SALN)

54
Q

The declaration of the organizational assets and Liabilities

A

Balance Sheet

55
Q

Covers na time period (a year)
Shows the summary of revenues generated vs expenses incurred

A

Revenue and Expenses Statement

56
Q

Reflects whether an organization is moving in a particular direction via its vakue appreciation or in a negative way through its decline value

A

Change in Fund Balance/Net Worth

57
Q

Translate a variety of accounting element, where cash has yet to be received along with depreciation of appropriate assets and converts them in a cash flow for designated period

A

Cash Flow

58
Q

Two groups that composed an institution

A
  1. Revenue Center
  2. Cost Center
59
Q

Is the intake of funds received by an organization for service rendered

A

Revenue

60
Q

Responsible for generating a percentage of the total revenues expected by the organization

A

Revenue

61
Q

Are expenditures incurred by the organization in the course of providing a service

A

Costs

62
Q

Is the supply, labor, and overhead money spent on a product or service

A

Expense

63
Q

Importance of Understanding Cost

A
  • to accurately price test and other services
  • to determine when and how to offer new tests
  • to determine whether to acquire new outreach client business or a manage care contact
64
Q

Expenses that can easily be traced directly to an end product and associated with a particular service or process

A

Direct Cost

65
Q

Example of this are Reagents and Consumables

A

Direct Cost

66
Q

Not directly related to a billable test but necessary for it a production
Associated with services or process ans must be paid even when a particular service is discontinued

A

Indirect Cost

67
Q

Example of this are clerical staff, inspection cost and utility expenses or hospital overhead

A

Indirect Cost

68
Q

Are cost that vary in proportion to the volume of goods or services that business produces

A

Variable Cost

69
Q

Example of this is reagent cost

A

Variable Cost

70
Q

Are cost that do not change with volume of tests performed

A

Fixed Cost

71
Q

Example of this is Laboratory Building Rental

A

Fixed Cost

72
Q

Are 50-70% of the laboratory budget
Generally fixed
Hourly pay plus benefits

A

Salary Cost

73
Q

How TOTAL COST OF EMPLOYMENT computed?

A

Salary + Benefits + Cost Recruitment + interview and selection process+ orientation, training, ongoing growth, and development cost

74
Q

Expenses incurred to produce a product or service

A

Operating Cost

75
Q

Example of this are reagents, electricity, disposable pipets, and the salary expense in production of a test

A

Operating Cost

76
Q

Have a useful life greater than one production cycle

A

Capital item

77
Q

Example of this are analytical equipment, computers, and physical plant

A

Capital Items

78
Q

Three Criteria of Capital Items

A
  1. time - must have useful life > 1
  2. Price - Reasonable
  3. Purpose
79
Q

Ways to derive cost of producing a test

A
  1. Microcosting
  2. Cost Per Reportable Result
80
Q

Determines the total direct labor and supply costs of producing a test,
and is the starting point to determine the fully loaded cost and ultimately the price for tests. (simplified level)

A

Microcosting

81
Q

Distributes the total direct costs of a run over the patient (nagastos lahat lahat)

A

Cost Per Reportable Result

82
Q

Cost per Test
Importance

A

• It can be used to compare analyzers being considered for use in the laboratory,
• to compare costs in central versus satellite laboratories.
• to evaluate the benefits of changing a batch size,
• or to decide whether to continue to perform the test in house or refer it out for testing.

83
Q

How to compute for Total Costs

A

Direct + indirect + salaries + administrative expenses+ equipment or maintenance equipment

84
Q

Cost Per Test

A

Total cost/number of Reportable test

85
Q

Achieved when the total costs for a test are equal to the total revenue received for performing the test

A

Break-Even Point

86
Q

Profit

A

Revenue Received>break event point

87
Q

Loss

A

Revenue<break-Even point

88
Q

Break Even Point formula

A

X = (F/C) / (R-V)

MT_2B (5 decks)

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