Financial Planning and Decision Making Quiz

Financial planning involves a focus on long-term goals and strategies.

ROI represents the measure of profitability in relation to the initial investment.

Financial management aims to enhance the value of the business for its shareholders.

Financial planning focuses on aspects like budgeting, forecasting, and investment, excluding human resource management.

Operational risk pertains to the potential losses from inadequate internal processes, systems, or external events.

Financial budgets project future income, expenses, and cash flows to guide financial decision-making.

A cash flow statement details the sources and uses of cash, aiding in understanding liquidity and financial health.

The balance sheet summarizes a company's assets, liabilities, and equity at a specific point in time.

This ratio assesses the proportion of a company's financing that comes from debt, indicating its leverage.

NPV assesses the present value of future cash flows minus the initial investment.

Financial ratios provide insights into a company's performance, profitability, and overall financial health.

The payback period indicates the time it takes for an investment to recover its initial cost through cash inflows.

Sensitivity analysis assesses how variations in key factors influence financial results and decision-making.

The debt-to-equity ratio gauges the proportion of a company's financing provided by debt relative to equity.

TVM recognizes the diminishing value of money over time due to factors like inflation.

Capital budgeting involves planning and evaluating long-term investments.

WACC determines the average cost of a company's capital based on its mix of equity and debt.

The present value formula calculates the current worth of a future cash flow discounted at a specified rate.

The hurdle rate represents the minimum acceptable rate of return for an investment in capital budgeting.