Understanding Financial Management Concepts

Which of the following best describes the main goal of financial management in a business?

• Maximising sales revenue

• Maximising shareholder wealth

• Minimising operating costs

• Increasing the number of employees

Which financial statement shows a company’s assets, liabilities, and equity at a specific point in time?

• Income Statement

• Statement of Cash Flows

• Balance Sheet

• Statement of Changes in Equity

• 0.5

• 1.0

• 2.0

• 2.5

Which of the following is NOT a source of long-term finance for a business?

• Bank overdraft

• Debentures

• Ordinary shares

• Retained earnings

What is the main purpose of budgeting in financial management?

• To record past transactions

• To plan and control future financial activities

• To calculate tax liabilities

• To increase product prices

Which of the following is an example of a non-current asset?

• Inventory

• Cash at bank

• Office equipment

• Accounts receivable

• \$2,000

• \$8,000

• \$10,000

• \$12,000

Which of the following best describes liquidity?

• The ability to generate profit

• The ability to pay short-term debts as they fall due

• The total value of assets

• The amount of equity in a business

Which of the following is a method of internal finance?

• Bank loan

• Retained profits

• Debentures

• Leasing

What does the term “working capital” refer to?

• Total assets minus total liabilities

• Current assets minus current liabilities

• Non-current assets plus equity

• Revenue minus expenses