Business Essentials 3.00 - Financial Management

Kayla, Tyler, and Brie have started a new business. What should be the purpose of their financial management?

• The purpose of their financial management should be to solely focus on short-term financial goals.

• The purpose of their financial management should be to effectively manage the financial resources of the company.

• The purpose of their financial management should be to minimize the importance of financial resources.

• The purpose of their financial management should be to maximize profits at all costs.

Delilah, Nabiel, and Johnny are studying for their financial management exam. They come across a question: 'What are the three main financial statements used in business?'

• income statement, balance sheet, and cash flow statement

• budget report, expense sheet, and investment summary

• tax report, liability statement, and inventory report

• profit statement, equity statement, and revenue statement

Peyton is running a small business. She is confused about the difference between profit and cash flow. Can you explain it to her?

• Profit is the difference between revenue and expenses, while cash flow is the amount of cash or cash equivalents that flow in and out of Peyton's business.

• Profit is the amount of cash that flows in and out of Peyton's business, while cash flow is the difference between revenue and expenses.

• Profit is the amount of money Peyton's business has in the bank, while cash flow is the amount of money her business makes.

• Profit and cash flow are the same thing in Peyton's business.

Logan has recently started a small business and Sam, a business analyst, is helping him understand his financial performance. Sam wants to calculate the return on investment (ROI) for Logan's business. Which formula should he use?

• ROI = (Net Profit / Initial Investment)

• ROI = (Net Profit / Initial Investment) * 100

• ROI = (Net Profit / Total Revenue) * 100

• ROI = (Net Profit / Total Assets) * 100

Evelyn, Marryssa, and Camden are discussing the concept of time value of money in financial management. Camden believes that the value of money remains constant over time. Evelyn thinks that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. Marryssa, on the other hand, believes that the concept of time value of money is not applicable in financial management. According to the principles of financial management, who is correct?

• Camden: The value of money remains constant over time.

• Evelyn: Money available at the present time is worth more than the same amount in the future due to its potential earning capacity.

• Marryssa: The concept of time value of money is not applicable in financial management.

• None of them are correct.

Arius, Erynn, and Brayden are planning to start a bakery business. They are discussing various sources of financing for their business. Can you identify the most viable options they could consider?

• Using their credit cards, borrowing from family and friends, and applying for government subsidies

• Seeking donations, investing in the stock market, and using lottery winnings

• Engaging in bartering, using inheritance money, and taking personal loans

• Using personal savings, taking loans from banks or financial institutions, seeking venture capital, finding angel investors, crowdfunding, applying for grants, and forming partnerships

Isiah, Tessa, and Sarah are studying for their financial management exam. They are discussing the role of financial ratios. According to their understanding, what is the role of financial ratios in financial management?

• Isiah believes that financial ratios are only useful for large corporations.

• Tessa thinks that financial ratios can only be used for short-term financial analysis.

• Sarah says that financial ratios are irrelevant in financial management.

• They all agree that financial ratios help in analyzing and interpreting financial statements, assessing the financial health of a company, identifying areas of improvement, and making informed decisions.

Matthew, Abigail, and Mattie are running a lemonade stand. They are trying to understand their costs. Can you explain to them the difference between fixed and variable costs in the context of their lemonade stand?

• Fixed costs are expenses like the cost of the lemonade stand and the initial purchase of cups that do not change regardless of the number of lemonades they sell, while variable costs are expenses like the cost of lemons and sugar that fluctuate based on the number of lemonades they sell.

• Fixed costs are expenses like the cost of the lemonade stand that are incurred only in the short term, while variable costs like the cost of lemons and sugar are expenses that are incurred over a longer period of time.

• Fixed costs are expenses like the cost of the lemonade stand that increase with the number of lemonades they sell, while variable costs like the cost of lemons and sugar are expenses that remain constant regardless of the number of lemonades they sell.

• Fixed costs are expenses like the cost of the lemonade stand that are directly related to the number of lemonades they sell, while variable costs like the cost of lemons and sugar are expenses that are unrelated to the number of lemonades they sell.

Nick , Amaya, and Mason are running a small business together. Why is budgeting important in their financial management?

• Budgeting only helps in controlling the financial resources of their business.

• Budgeting is not important in their financial management.

• Budgeting is only important for their personal finance management.

• Budgeting is important in their financial management because it helps in planning and controlling the financial resources of their business.

Adam, Robbie, and Sean are planning their financial future. What are the key components they should consider in their financial plan?

• Setting financial goals, creating a budget, managing debt, saving and investing, and planning for college

• Setting financial goals, creating a budget, managing debt, saving and investing, and planning for a vacation

• Setting financial goals, creating a budget, managing debt, saving and investing, and planning for a new car

• Setting financial goals, creating a budget, managing debt, saving and investing, and planning for retirement