Principles of Finance · free preview

What Finance Is and the Role It Plays

Finance is the study of how money is managed, moved, and raised, organized into business finance, investments, and financial markets and institutions, and carried out inside a firm by the controller, the treasurer, the VP of finance, and the CFO.

1. Finance as the study of money in motion

Finance as the study of money in motion

2. The three decisions inside business finance

The three decisions inside business finance

3. The people who run the finance function

The people who run the finance function

4. Financial planning as the connective tissue

Financial planning as the connective tissue

5. The best definition of finance

Which statement best captures what the study of finance is fundamentally about?

6. The three basic areas

Which list names the three primary areas of finance in the domestic market described in this lesson?

7. Matching decision to balance sheet region

A financial manager is deciding how to fund a new factory that will operate for twenty years. Which decision area does this primarily belong to?

8. Controller versus treasurer

Which pairing correctly distinguishes the controller from the treasurer in a typical organization?

9. The CFO's distinctive role

What most clearly separates the chief financial officer from the vice president of finance?

10. Pro forma statements in planning

In financial planning, what exactly is a pro forma income statement?

11. The number of basic areas

How many primary areas of finance are identified in the domestic market in this lesson? Write the number.

12. The most value-adding function

Which of the three business finance decision areas is widely viewed as adding the greatest value to the firm? Answer with the two-word term.

13. The outward-facing role

Which finance role faces outward to bankers, underwriters, and other funding sources and invests excess funds? Answer with one word.

14. The forward-looking statement

What is the two-word term for a forward-looking income statement used in financial planning? Write the term in lowercase.

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