Financial Management
Commerce ⇒ Business Studies
Financial Management starts at 12 and continues till grade 12.
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Define financial management.
Explain the effect of a liberal credit policy on the working capital requirement of a business.
Explain the impact of over-capitalization on a company.
Explain the importance of financial management in business.
Explain the relationship between risk and return in financial management.
Explain the term 'capital structure'.
Explain the term 'trading on equity'.
A company has a return on investment (ROI) of 15% and a cost of capital of 10%. Should the company accept a new project with an expected return of 12%?
Which of the following is a factor affecting the capital structure of a company? (1) Cost of debt (2) Brand image (3) Product quality (4) Market share
Which of the following is a feature of preference shares? (1) Voting rights (2) Fixed rate of dividend (3) Redeemable at any time (4) No claim on assets
Which of the following is a limitation of debt financing? (1) Increases financial risk (2) Dilutes ownership (3) Reduces tax liability (4) Increases flexibility
Which of the following is a long-term investment decision? (1) Purchase of raw materials (2) Purchase of machinery (3) Payment of wages (4) Payment to creditors
Fill in the blank: The ________ decision relates to the distribution of profits to shareholders.
Fill in the blank: The ________ ratio measures the ability of a company to meet its short-term obligations.
Fill in the blank: The cost of capital is the ________ rate of return expected by investors.
Fill in the blank: The process of raising funds from the public by issuing shares is called ________.
State whether the following statement is true or false: 'Retained earnings are an internal source of finance.'
True or False: A high degree of risk is associated with a high proportion of debt in the capital structure.
True or False: Financial leverage is the use of fixed cost funds to increase the potential return to shareholders.
True or False: The dividend decision affects the retained earnings of a company.
