Summary: Fm1 Final Notes

Read the summary and the most important questions on FM1 Final Notes

• 1 Chapter 1 The Role of Managerial Finance:

  This is a preview. There are 127 more flashcards available for chapter 1
  Show more cards here

• What is the importance of finance in different activities within a company?

  - Finance involves money management
  - It affects operations, marketing, management, information systems, and accounting
  - Finance assists in estimating and approving expenditures
  - It helps in understanding the relationship between maximizing profit and increasing company value

• How does finance influence operations within a company?

  - Finance estimates and approves operations expenditures
  - It allocates funds for operations activities like production
  - Connecting finance with operations can enhance production efficiency
  - Understanding the relationship between cost-cutting and company value is essential

• How can finance support management within a company?

  - Finance aids in communicating the company's main goal to stakeholders
  - It provides insights into the relationship between managers and owners
  - Finance helps align the interests of different groups through compensation
  - Understanding the legal forms of a company and their liability implications is crucial

• Why is it important for finance to align the interests of managers and owners within a company?

  - Finance helps in understanding the relationship between managers and owners
  - It aids in aligning their interests through compensation systems
  - Aligning interests can help ensure better decision-making and performance
  - Different legal forms of a company have varying liability repercussions

• What is the importance of financial information for all functional departments of a company, according to the information provided?

  - Financial information is crucial for all functional departments
  - People involved in information systems activities should be aware of this importance
  - Manipulation of information can lead to serious problems

• What should people in the accounting department understand about the relationship between finance and accounting?

  - Finance helps in understanding how managers use financial statements
  - Difference between maximizing a company's value and profit
  - Compliance with ethical standards while reporting financial results

• What does the field of financial services encompass?

  - It provides advice and financial products to individuals, companies, governments
  - Includes banks, insurance companies, investment funds, etc.

• What are the key responsibilities involved in managerial finance, as explained in the information?

  - Preparation of financial plans and budgets
  - Evaluation and recommendation of investments
  - Raising money for company operations
  - Managing credit policy and foreign operations, assessing exchange rate risks

• Why is it crucial for information systems activities to be in accordance with regulations and produce adequate documentation?

  - Compliance with regulations ensures legal and ethical operations
  - Adequate documentation provides transparency and accountability
  - Any manipulation of information can lead to serious consequences for the company

• Which legal form of business organization is the most common, accounting for about 73% of all businesses?

  The most common legal form of business organization is the sole proprietorship.