6381130
Descrição
FlashCards por Nanna Bach Munkh, atualizado more than 1 year ago
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Criado por Nanna Bach Munkh
aproximadamente 10 anos atrás
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| Questão | Responda |
| Financial management means | Planning, organizing, directing & controlling of financial activities |
| Economics | Focus on the future |
| Accounting | What has happened Historical Transactions in terms of money |
| Finans | In between future and past |
| Financial economics | Is subject that studies the financial system |
| Financial system | Financial markets: capital(long term) money market(short term) Financial institution: service providers(banks) Financial instruments: studies sticks, bonds |
| Profit is which concept? | Economic concept |
| Return is which concept? | Financial concept |
| Security analysts | Trying to understand the fundamental value of security =financial instruments=financial assets |
| What is a financial asset | It's someone else's liability (stocks, bonds or currency) |
| Portfolio theory | Group of investments/assets taken together -->proper return |
| Market analysis | Understanding the financial market & their behavior |
| Behavior of finance | Subject which studies human nature & how humans makes financial decisions |
| Objectives of financial management | Ensure regular funds to the shareholders Optimum funds of utilization Safety on investment Plan a sound capital structure |
| Key activities of financial management | Enter text here... |
| Capital allocation process | Enter text here... |
| Functions of financial management | 1.estimate of capital requirements 2.Determination of capital composition 3.choices of sources of funds 4.Investment funds 5.Disposal of surplus 6.Management of cost 7.Financial control |
| Capital requirements | Depends on expected costs & profits Future programs & policies of concern |
| Determination of capital composition | Deciding on capital structure Short/long term & dept & equity |
| Choices of sources of funds | Shares or debentures, loans from financial institutions Public deposits to be drawn like in forms of bonds |
| Investment funds | The Finans manager has to decide to allocate funds into profitable ventures so there is safety & regular returns |
| Disposals of surplus | Dividend declaration Retained profits |
| Inflation | Purchased power changes over time |
| Interest rate | Measurement of the time value of money |
| Single payment compound | F=P(1+i)^n Single payment present worth P=(F/(1+i)^n) |
| Annuity | Equal payments over time |
| Loans | Enter text here... |
| Capital budgeting | Strategic asset allocation 1)long term consequences 2)often involves substantial outlays 3) Maybe difficult or expensive to reverse |
| Proces of capital budgeting | 1) identification of potential investment opportunities 2) assembling of investment proposals 3) decision making 4)preparation of capital budget & appropriations 5) Implementation 6) Performance review |
| Identification of potential investment opportunities is helpful to | Monitoring external environment->scout for investment ideas Formulate a corporate strategy Share corporate strategy with persons involved Motivate employees to make suggestions |
| Assembling of investment proposals | Classified into various categories 1) replacement investment 2) Expansion 3) new products 4) Obligatory & welfare investments |
| Project classification | Mandatory Replacements Expansions Diversification Research & development Miscellaneous projects |
| Miscellaneous projects | Interior decoration Personal preferences |
| Investment criteria | Discounting: -NPV -benefits cost ratio -internal rate of return Non-discounting -payback period -accounting rate of return |
| Net present value | Sum of present value of all cash flows Which is expected to occur over the life of the project Does not consider life of the project |
| Equivalent annual cost | Is project have different years of completion Uses to compare them PVIFAk,n=(1-(1+k)^-n)/k |
| Benefit cost ratio | BCR=PVB/I Net benefit cost ratio: NBCR=(PVB-I)/I=BCR-1 PVB: present value of benefits I: initial investment |
| Initial rate of return | IRR of a project is the discount rate which will make it's NPV=0 Accept if IRR>cost of capital |
| Payback method | Enter text here... |
| Discounted payback period | The number of years required to recover the investment from discounted net cash flows |
| Accounting rate of return | Average rate of return Profit after tax / book value of the investment = between 20-30% are accepted |
| NPV profil | Enter text here... |
| MIRR | The discount rate that forces the precent value of terminal value equal to present value of cost |
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