FINANCIAL MANAGEMENT

FINAL EXAMINATION

I. IDENTIFICATION. Identify the following statements.

1. It refers to the mix of debt and equity that a company uses to finance its operations.
2. The degree of current assets that a company employs for achieving a desired level of
sales is manifested in working capital policy.
3. It represents means of generating funds by the business itself from its own operations.
4. It represents means of generating funds through outside entities.
5. Funds which are procured by the owners of a business.
6. It refers to the funds raised with the help of loans or borrowings.
7. Sources of funds that lie outside an organization.
8. It always depends on the profitability of the entity.
9. It means raising of capital by issue of shares to existing or new shareholders.
10. It ensure a smooth and uninterrupted working capital cycle.
11. It takes an edge over and above matching approach.
12. It determines how owners and creditors share business performance risk and rewards.
13. These are after tax profits.
14. It is found in the shareholders’ equity portion of the balance sheet.
15. A calculation that derives the average percentage of payout required by the company to
its investors for all of its capital.

II. Enumerate.

1. Kinds of sources of funds (2)

2. Approaches of Financing (3)
3. Sources of Equities (2)
4. Working Capital Policies (3)

III. Discuss the following in not less than 10 sentences for each item.

1. Difference between the internal and external sources of finance.

2. Does the different sources of funds affect the business to survive?
3. Explain. “As short-term financing is less costly but risky, long term financing is less risky
but costly”.