Chapter 1 Overview of Corporate
Finance Questions and Answers grade
A+ 2023
What is a corporate finance? - -What investments should you take on?
Where will you get the financing to pay for your investment? When the business is successful,
how will you share in the rewards?
-What is a balance sheet? - -The balance sheet is a snapshot of the firm. It is a convenient means
of organising and summarising what a firm owns (its assets), what a firm owes (its liabilities),
and the difference between the two (the firm's equity) at a given point in time.
-What are current assets? - -cash, inventory accounts receivable and other assets that will
normally be converted into cash within a year
-Current Liabilities - -debt or other obligations due for payment within a year
-Shareholder's equity - -the difference between the total value of the assets and the total value of
liabilities. eg. if the firm were to sell all of its assets and use the money to pay off its debts, then
whatever residual value remains belongs to the shareholders.
-net working capital - -the difference between a firm's current assets and current liabilities
-endowment - -Permanent fund of property or money bestowed upon an institution or a person,
the income from which is used to serve the specific purpose for which the gift was intended
-capital budgeting - -the process of planning and managing a firm's investment in non-current
assets
-
Finance Questions and Answers grade
A+ 2023
What is a corporate finance? - -What investments should you take on?
Where will you get the financing to pay for your investment? When the business is successful,
how will you share in the rewards?
-What is a balance sheet? - -The balance sheet is a snapshot of the firm. It is a convenient means
of organising and summarising what a firm owns (its assets), what a firm owes (its liabilities),
and the difference between the two (the firm's equity) at a given point in time.
-What are current assets? - -cash, inventory accounts receivable and other assets that will
normally be converted into cash within a year
-Current Liabilities - -debt or other obligations due for payment within a year
-Shareholder's equity - -the difference between the total value of the assets and the total value of
liabilities. eg. if the firm were to sell all of its assets and use the money to pay off its debts, then
whatever residual value remains belongs to the shareholders.
-net working capital - -the difference between a firm's current assets and current liabilities
-endowment - -Permanent fund of property or money bestowed upon an institution or a person,
the income from which is used to serve the specific purpose for which the gift was intended
-capital budgeting - -the process of planning and managing a firm's investment in non-current
assets
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