ASU FIN 300 Exam 1 (Ch 1-4) EXAM
ELABORATIONS QUESTIONS AND VERIFIED
ANSWERS 2025 UPDATE | 100% SOLVED!!
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Terms in this set (125)
1. Financial Management
-buying/selling of assets
-financing choices
-control costs
2. Investments
Three areas of finance: -purchasing and holding assets & securities
-stocks and bonds
3. Financial Markets
-capital markets
-money markets
-financial intermediaries (banks or credit unions)
the long-term tangible and intangible assets a firm
uses to generate cash flows
Productive assets Tangible = equipment etc.
intangible = patents, trademarks, technical experience
when purchase productive assets = capital budgeting
, the value of the owner's stock
Financial Managers should
make decisions that
which helps maximize the owner's wealth (the
maximize
economic value of the assets the owners possesses)
anyone other than the owner (stockholder) with a
Stakeholder claim on the cash flows of a firm (employees,
customers, creditors, suppliers, the government)
a. Capital budgeting- which productive assets to buy
b. Financing decisions- raising money to buy more p
assets, mainly through selling long term debt and
3 fundamental decisions in equity
financial management c. Working capital decisions- involve how firms
manage their current assets and liabilities. Enough
money to pay the bills and any money left over is
invested to earn a return
which productive assets the firm should purchase
and how much money the firm can afford to spend
Capital Budgeting
long term assets on balance sheets/investments/
productive assets both tangible and intangible
how firms raise cash to pay for their iterm-
55nvestments
ex: productive assets financed by long term
borrowing or equity investment
Financing decisions debt financing - advantage=tax deductable
but increase firms risk because contractual obligation
to make interest payments
equity- has no maturity/guarantee of payments.
long term liability (debt) and equity
, how to manage the firm's current assets and current
liabilities
day to day management of short term asserts and
Working capital
liabilities
management decisions
-mismanagement cause firm to go into
debt/bankruptcy
-profitability affected
the mix of debt and equity that is used to finance a
Capital structure
firm
the dollar difference between total current assets and
Net working capital
total current liabilities
financial markets where equity and debt instruments
Capital Markets
with maturities greater than one year are traded
cash remaining after a firm has paid operating
expenses and what it owes creditors and taxes, can
Residual Cash Flow
be distributed to owners as cash dividend or by
repurchasing shares or reinvested into business
A. Cash flows generated by productive assets through
sale of goods/services → management invests in
current and productive long term assets → cash paid
as wages, to suppliers, as interest, as taxes → to
Cash flows between firms employees, suppliers, creditors and government
and stake/stockholders (stockholders)
B. Residual Cash Flow
→ cash reinvested in business
→ cash used to pay dividends/repurchase shares
ELABORATIONS QUESTIONS AND VERIFIED
ANSWERS 2025 UPDATE | 100% SOLVED!!
Save
Terms in this set (125)
1. Financial Management
-buying/selling of assets
-financing choices
-control costs
2. Investments
Three areas of finance: -purchasing and holding assets & securities
-stocks and bonds
3. Financial Markets
-capital markets
-money markets
-financial intermediaries (banks or credit unions)
the long-term tangible and intangible assets a firm
uses to generate cash flows
Productive assets Tangible = equipment etc.
intangible = patents, trademarks, technical experience
when purchase productive assets = capital budgeting
, the value of the owner's stock
Financial Managers should
make decisions that
which helps maximize the owner's wealth (the
maximize
economic value of the assets the owners possesses)
anyone other than the owner (stockholder) with a
Stakeholder claim on the cash flows of a firm (employees,
customers, creditors, suppliers, the government)
a. Capital budgeting- which productive assets to buy
b. Financing decisions- raising money to buy more p
assets, mainly through selling long term debt and
3 fundamental decisions in equity
financial management c. Working capital decisions- involve how firms
manage their current assets and liabilities. Enough
money to pay the bills and any money left over is
invested to earn a return
which productive assets the firm should purchase
and how much money the firm can afford to spend
Capital Budgeting
long term assets on balance sheets/investments/
productive assets both tangible and intangible
how firms raise cash to pay for their iterm-
55nvestments
ex: productive assets financed by long term
borrowing or equity investment
Financing decisions debt financing - advantage=tax deductable
but increase firms risk because contractual obligation
to make interest payments
equity- has no maturity/guarantee of payments.
long term liability (debt) and equity
, how to manage the firm's current assets and current
liabilities
day to day management of short term asserts and
Working capital
liabilities
management decisions
-mismanagement cause firm to go into
debt/bankruptcy
-profitability affected
the mix of debt and equity that is used to finance a
Capital structure
firm
the dollar difference between total current assets and
Net working capital
total current liabilities
financial markets where equity and debt instruments
Capital Markets
with maturities greater than one year are traded
cash remaining after a firm has paid operating
expenses and what it owes creditors and taxes, can
Residual Cash Flow
be distributed to owners as cash dividend or by
repurchasing shares or reinvested into business
A. Cash flows generated by productive assets through
sale of goods/services → management invests in
current and productive long term assets → cash paid
as wages, to suppliers, as interest, as taxes → to
Cash flows between firms employees, suppliers, creditors and government
and stake/stockholders (stockholders)
B. Residual Cash Flow
→ cash reinvested in business
→ cash used to pay dividends/repurchase shares
