Finance for Non Finance Managers

Best Owner Principle in The Four Cornerstones of Corporate Finance

• Best ratio of share ownership of the founder and minority shareholders

• Best composition between debt and equity

• Value creation is the best indicator of performance from the point of view of the owner

• Business value depends upon the owner’s capability in creating value for the asset owned

In general, items of asset in a balance sheet are listed based on:

• Size of the assets

• Liquidity of the assets

• Value of the assets

• Expiration date of the assets

Below statement which is not characteristics of Equity is:

• Have a voting right

• Has no maturity date

• Represent ownership

• Legally liable to pay dividend

A current assets is :

• the last asset purchased by a business

• an asset which is currently being used to produce a product or service

• usually found as a separate classification in the income statement

• An asset which is expected to be converted to cash or used in the business within a relatively short period of time

Current Ratios and Quick Ratio are categorized as :

• Liquidity Ratios

• Asset Management Ratios

• Debt Management Ratios

• Profitability Ratios

Which of the following statements is correct?

• The more efficiently a company utilizes its assets, the greater its return on asset, all other things being equal

• If return on equity increases, the return on assets must have also increased

• If the number of days inventory increases, the return on assets will increase, all other things being equal

• All of above is correct

Strength of Pay-back period includes

• Discounted Cash Flows

• Easy to use

• Involve required rate of return

• Consider all cashflows

Which one is NOT a factor that determines level of investment in Account Receivables:

• Level of sales

• Carrying costs

• Credit and collection policies

• Terms of sale

Which one is NOT an important concept of business according to Prof. Ram Charan:

• Present Value

• Cash

• Profit Margin

• Velocity

Financial Management’s primarily / ultimate goal is

• to increase market share

• to increase revenues

• to increase firm's value

• to minimize cost