+1, What are functions of corporate finance?

- One of the core functions of corporate finance is to make wise use of the financial resources
available to the company. The functions may include the management of investment, creating
and managing the process for issuing shares of stock or offering corporate bonds, and
acquisitions of property or other companies, mergers, corporate restructures, or the selling of the
company assets.
2, What are objectives of corporate finance?
Some main objectives of corporate finance are making wise of financial resources, developing an
operation budget, tracking income. The general goal of corporate finance is to ensure that the
company is achieving the maximum profits while incurring the minimum amount of expenditure.
3, How can a company raise capital? (2 ways of raising more capital)
There are 2 main ways of raising more capital for a company: debt financing and equity
financing. A company can increase its equity by issuing new shares, selling parts of the
company’s assets. Beside, a company can raise liabilities by issuing new bonds, borrowing
money from banks or other financial institutions.
4, What are advantages and disadvantages of owner’s capital?
-Advantage: The owners have a claim on all the net profits.
-Disadvantage: Owner’s capital is the most exposed form of capital because:
+ A return is received only after all other calls on company profits have been satisfied
+ In the case of bankruptcy, the owner’s equity will be repaid only after everyone else
including employees, creditors, banks
5, What are advantages and disadvantages of venture capital?
- Advantage: The advantage of venture capital is that the venture capital company doesn’t
usually interfere in the running of the company
- Disadvantage: However, the venture capital company usually demands a much faster and
higher rate of return than an owner would expect from their own capital
6, What are advantages and disadvantages of long-term loans?
-long –term loán provide companies opportunities to raise capital.in time of prosperity,long term
loán can give the owners much better returns because net profit will be a much higher
percemtage of equity after interest payments,on the long term debt.hower,in hander times,the
owner’s earning will drop dramatically because interest payments soak up most of the
company’s profits.
7, What are advantages and disadvantages of listed security markets (stock exchange)?
- Advantage: The listed security market has the advantage of providing the long-term
opportunity of raising capital by issuing fresh shares.
- Disadvantage: However, at least 25% of the equity must be in public hands there by reducing
the control of the original owners.
8, How is working capital of a company classified?
- There are 2 types of working capital is permanent and temporary working capital.Permanent
working capital is tied up in keeping the business flowing throughtout the year.while tempory
working capital is needed from time to take account of seasonal,cyclinal,unexpected,fluctuations
in the business.
9, What is the task of finance manager in managing inventories?
- It is job of the financial manager to minimize the stocks of the raw materials,the level of the
work-in-progress and the quantity of finished goods
10, What is the task of finance manager in managing debtors?
A balance must be achieved between getting and giving good credit terms in order to attract
customers and maintain positive relationships with suppliers on one hand, and minimizing cash
outlay on the other hand.
11, What is the task of finance manager in managing cash?
Cash management will ensure that adequate cash is always available for meeting the company’s
day-to-day debts and that there is also a small reserve on hand to meet contingencies.
12, What are differences between “selling” and “marketing” concept?
- The selling concept assumes the resisting consumers have to be persuaded by vigorous hard-
selling techniques to buy non-essential goods and services.
- The marketing concept, on the contrary, assumes that the producer’s task is to find wants and
fill them. Producer makes product that will be bought.
13, What are 4Ps in the marketing mix? What are included in each element of the marketing
mix?
- 4Ps in the marketing mix are product, place, promotion and price.
+ Products include quality, feature, style, brand name, size, packaging, services and guarantee.-
Place includes distribution channels, locations of points of sale, transport, inventory size.-
Promotion groups together advertising, publicity, sales promotion and personal selling.-Price
includes the basic list price, discounts, the length of the payment period, possible credit terms.
14, What are the most common mistakes in setting the price?
- The most common mistakes are:
+ Pricing is too cost oriented
+ Price is not revised often enough to capitalize on market changes
+ Price is set independently of the rest of the marketing mix rather than as an intrinsic element
of market-positioning strategy
+ Price is not varied enough for different product items and market segments.
15, How are prices set in different types of corporation?
- In small companies, prices are often set by top management rather than by the marketing or
sales department.
- In large companies, pricing is typically handled by divisional and product-line managers.
- In industries, pricing department to set prices or assist others in determining appropriate prices.
16, What is financial accounting information? For what purposes is financial accounting
information used?
- Financial accounting refers to information describing the financial resources, obligations, and
activities of an economic entity.
- Financial accounting information is designed primarily to assist investors and creditors in
deciding where to place their scarce investment resources.
- Financial accounting information also is used by managers and in income tax returns. In fact,
financial accounting information is used for so many different purposes.
17, What are the tasks of accountants in general?
- The tasks of an accountant are:
 + In daily business operations, an accountant records all business
transactions in a journal
+ Periodically, the accountant transfers figures from journal to ledger (it’s
a book containing all the accounts on the company)
+ The accountant uses the information in the accounts to construct financial
statements
18, What is management accounting information? For what purposes is management
accounting information used?
- Management accounting involves the development and interpretation of accounting
information.
- Management accounting information is designed to assist the management:
+ In running the business
+ In setting the company’s overall goals
+ Evaluating the performance of departments and individuals
+ Deciding whether to introduce a new line of products
+ In making virtually all types of managerial decisions
19, What are differences between financial accounting and management accounting?
- Financial accounting refers to information describing the financial resources, obligations, and
activities of an economic entity.
- On the contrary, management accounting involves the development and interpretation of
accounting information intended specifically to assist management in running the business.
20, What is financial analysis? For what purposes is financial analysis used internally and
externally?
- Financial analysis is the selection , evaluation, and interpretation of financial data, along with
other pertinent information, to assist in investment and financial decision-making.
- Financial analysis is used internally to evaluate issues such as employee performance, the
efficiency of operations, and credit policies, and externally to evaluate potential investments and
the credit-worthiness of borrowers, among other things.
21, What do three types of financial statements show/indicate?
There are the balance sheet,the income statementand the statement of changes in financial
position.the balance sheet shows the company’s financial situation on a particular date.it lissts
the company’s assets,ít liabilities and shareholder’s funds.the income statement show earning
and expenditures,it usually gives figures for total sales or tunover and cost and overhead.The
cash slow statement show the flow cash in and out of the business between balance sheet date.
22, What are sources of data available for financial analysis?
- They are financial statement data, market data, economic data:
+ Financial statement data is provided by the company in its annual reports and require
disclosures.
+ Market data such as the market price of securities is found in the financial press and the
electricity media daily.
+ Economic data: GDP, CPI available from government and private sources.
23, What are the tasks of internal auditors?
 They continously review operating procedures and financial records,report to managemant on the
curent state of the company’s fiscal affairs,also make suggestion to managemant for
improvements in the standard operating procedures,check the accounting records in the regard to
completeness and accuracy,making sure that irregularities are corrected,seek to ensure that the
various department of the company follows the policies and procedures established by
management.
24, What is internal auditing? What are advantages and disadvantages of internal auditing?
- Internal auditing is
- Advantages of internal auditing: Thanks to internal audit, the management:
+ Knows the current state of the company’s fiscal affairs
+ Knows deviations from standard operating procedures
+ Receives suggestions for improvement in the standards operating procedures
25, Why do governments encourage exports? What should governments do to encourage
exports?
- The Government tries to control the exports because a country enjoys an advantage if it
exports more than it imports. Wealth accrues to the exporting country.
- The Government tries to control the imports to protect the domestic industry and provide
employment for the population.
- They have special programs to encourage exports such as:
+ Provide marketing information
+ Establish trade mission
+ Subsidize exports
+ Provide tax benefits or incentives
26, How should governments restrict imports? For what purposes?
They have special programs to encourage exports such as:
+ Provide marketing information-Establish trade mission- Subsidize exports - Provide tax
benefits or incentives
- Governments impose taxes and quotas to restrict imports of certain products.
27, Name trade barriers? What are the reasons for imposting trade barriers?
Name trade barriers: tariffs, quotas, subsidies and embargoes.
The reasona for imposing trade barriers:
+ To protect domestic employment
+ To protect young domestic industries until they are strong enough to compete
internationally
+ To avoid unfair trade practices of foreign companies
+ To avoid the practices of “dumping”
+ To protect firms and industries that produce outputs vital to natin securities and defense

 Corporate finance is a broad term that is used to collectively indentify the various financial
dealings under taken by a corporatipon.
 One of the core function of corporate finance is to make wise use of the financial resources
avaiable to the company
 Finance can be collected from many sources,share,banks,financial institution,so on.
 Two type of corporate finance are fixed capital and working capital.
 Fixed capital is used to purchase fixed assest like: land, buildings,machinery,so on.
 Working capital is used to purchase raw material and to pay day to day expenses like:
salaries,rent,taxes,electricty bill…
 The Advantage of venture capital is that the venture company does’nt usually interfere in the
running of the company.
 Gearing is the relationship between equity capital invested in the business and long-term debt.
 In Harder time the ower’n earnings may drop dramatically because interest payment soak
most of the company’s profit.
 At lesat 25 percent of the equity must be in public hands there by reducing the control of the
original owners.
 Venture capital is usually provided by venture firms interest in financing high growth
companies.
 Unlisted securities market has the advantage of allowing the company to raise money from
outside investors without using much control of the company.
 Inventories can be divided into raw materials,work in progress and finished goods.
 Permanent working capital is used to keep the business flowing throughout the year.
 Temporary working capital is needed sometimes to take account of seasonal cyclial or
unexpected fluctuation in the business.
 In managing debtors, the financial managers have to negotiate generous credit terms with
suppliers
 In managing cash, the financial managers have to determine adequate cash avaiable for
meeting day to day debts and dealing with contigencies.
 .Capital expenditure in fixed assests such as plants,machinery,land,buildings,etc of a business
are fund by using long term sources of finance.
 ” Palce” involves using the best possible channels of distrbutions such as leading super
market chains.
 ” Marketing opportunities” means possibilities of filling unsatisfied needs in sectors in
which a company can profitably produce goods or services.
 Target consumers are people or group of people who are targeted to buy to centain product.
 It’s the job of a product manager or brand manager to look for ways to increase sales by
channing the marketing mix.
 Market segmetaion is deviding a market into distinct group of buyer who have different
requirements buying habits.
 Sales representative are people who contact/ existing and potential customers and try to
persuade them to buy goods or services.
 Through most of history,prices were set by buyerand seller negotiating with each other.
 Seller would ask for a higher price than they expected to receive,and buyer would offer less
than they expected to pay.
 Non price factors have become relatively more important in buyer choice behavior in recent
decades.
 Yet price still remains one of the most important elements determining company market share
and profitablility.
 Price is the only element in the marketing mix that produces revenue,the other elements
represent costs.
 In small company,prices are often set by top management rather by the marketing or sales
department.
 Financial accounting focuses on the reporting of an organization financial information to
exteral users of the information.
 One of the function of accounting is to provide certain types of quantitative information that
management and others can use make decisions.
 The term ” Financial accounting,management accouting and tax accouting”are often used in
describing the types of accouting information most widely in the business community.
 Accounting is simple the means by which we mesureand describe the results of economic
activities.
 Financial accounting refers to information describing the financial resources, obligations and
activites of an economic entity.
 Tax planning means anticipating the” tax effects” of business transaction and structuring these
transactions in manner that will minimized the income tax bunden.
 The balance sheet is financial statement that summarize a company’s assets, liabilities and
shareholder’s equity at specific point in time.
 Three major categories, listed on the balance sheet are assets,liabilities and ower’s equity.
 Examples of assets accounts which are reported on the balance sheet include cash, petty
cash,temporary,investments,supplies,land,building,etc.
 Annual report comprise the income statement. The balance sheet, and the statement of cash
flows,as well as footnotes to these statements.
 The profit and loss account shows earnings and expenditures.
 The balance sheet list a company’s assets,its liabilities shareholder’s funds.
 The company’s net asstets consist of share capital share premium and company’s reserves
including the year’s retained profits.
 A turnover ratio is a measure of the gross benefit relative to the resources expended.
 A turnover investment ratio provides information on the profit relative to the assets employed
to produce that profit.
 Aliquidity ratio provides information on a company’s ability to meet it’s short term
obligations.
 Financial analysis is the selection, evaluation and the interpretation of financial data to assists
in financial decision making.
 A component percentage is the ratio of a component of an iteam to the item.
 A profitability ratio provides information on the amount of income from each dollar of sales.
 A financial ratio is a comparision between one bit of financial information and a nother.
 A ratio is a mathematical ralation between one quantity and another.
 In financial analysis,you need to event that help explain the company’s present conditions.
 A coverage ratio is a measure of a company’s ability to statify particular obligations.
 Auditing is an accounting function that involves the review and evaluation of financial
records.
 Many corporation,especially the larger ones with complex operations maintan a continous
internal audit by their own accounting department.
 Internal auditor make suggestion to the managements improvementsin the standard operating
procedures.
 Auditing is the task checking and affirming the fairness and reliability of financial records on
the basic of accounting standards.
 Overall,internal auditors seck to ensure that various department in the company follow the
policies and procedures established by management.
 They check the accounting records in the regard to completeness and accuracy,making sure
that all irregularities are collected.
 An Operatonal audit is the review of any part of an organizations opreting procedures and
methods for purpose of evaluating efficiency.
 The emphasis placed on different parts of internal auditor’s report from vary company to
company.
 Internationnal trade develops because certain countries are able to produce some goods more
efficiently than other countries.
 A Certain climate in a particular country may allow that country to grow agricultural
products in a bundance.
 A Basis for murtual beneficial trade is that one country has a comparative advantage.
 Wealth accrues to the exporting country if it exports more than it imports.
 Dumping is the selling on a foreign market at a price below the cost of production.
 Government want to protect the domestic industry because that industry provides employment
for the population.
 Trade barriers are any of number of government-placed restrictions on trade between nations.
 The term free trade refers to the theoretical removal of all trade barriers,allowing for
completely free and unfettered trade.
 Trade barriers prevent the country from depending on these imports and greater reliance on
domestic production for domestic employment.
 A specific tariff is certain amount of tax unit of product.
 Embargoes used to prevent the import or export of anything with another country.
 A tariff increases the price of the item, raises revenue for the government, and control
consumption through market forces.
 The Balance of payments is amount of money going in out of a country.