Financial Management Flashcards
6 cards from real CBA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Financial Management flashcards as text
What is the primary goal of financial management in a business?
Answer: Maximize shareholder wealth
The main goal of financial management is to maximize shareholder value while ensuring the company remains financially healthy.
Which financial statement shows a company’s profitability over time?
Answer: Income statement
The income statement summarizes revenues and expenses to show net profit or loss over a specific period.
What does the term 'working capital' refer to?
Answer: Current assets minus current liabilities
Working capital represents a company’s short-term financial health, calculated as current assets minus current liabilities.
Why is budgeting important in financial management?
Answer: To manage expenses and forecast revenues
Budgeting helps plan and control spending, ensuring financial resources are allocated effectively to meet strategic goals.
Which ratio measures a company’s ability to meet short-term obligations?
Answer: Current ratio
The current ratio compares current assets to current liabilities to assess short-term liquidity.
What is capital budgeting primarily used for?
Answer: Evaluating long-term investment projects
Capital budgeting involves evaluating and selecting long-term investments that are in line with the firm's strategic objectives.