WGU C201 Business Acumen Chapter 17
Financial Management questions and
answers with solutions
Financial Structure - ANSWER Chief Financial Officer, Vice President of Finance, Treasurer, and
Controller
Chief Financial Officer - ANSWER Leader of the financial team.
Reports to Chief Executive Officer.
May be on board of directors.
This person and CEO must certify accuracy of financial statements.
Vice President of Finance - ANSWER Makes recommendations to CFO for where to invest
capital.
Prepares financial forecasts, analyzes investment decisions, and specifies funds needed for a
time period: inflows and outflows.
Treasurer - ANSWER Responsible for financial activities, cash management, tax planning.
Controller - ANSWER Chief accounting manager.
Keeps books.
Prepares financial statements.
Risk-Return Trade-Off - ANSWER The goal is to maximize the wealth of the firm's shareholders
by striking the optimal balance.
Often decisions involving the highest potential returns expose the firm to the greatest risk.
, What is the purpose of a financial plan? - ANSWER To forecast and determine the specific
amounts and timing of expenditure and receipts.
The inflows and outflows and sources of funds.
What are the steps of preparing a financial plan? - ANSWER 1. Forecast of Sales or Revenue over
a time period
2. Profit forecast: Use the sales forecast to determine expected levels of profit for future
periods. Includes expenses, and payments to shareholders
3. Estimate how many additional assets the firm will need to support projected sales.
This information comes from the Sales Forecast (product you are going to sell).
Non-Sales Forecast (other ways the organization will generate income).
Asset Intensity (the increase in assets you'll need to meet the forecast).
Current Assets (also short term assets) - ANSWER Cash and cash assets that are expected to be
converted to cash within one year.
Examples: cash, marketable securities, inventory, accounting receivables.
Long-Term Assets - ANSWER Investments
Expansion
Replacing assets
What are the two types of funding? - ANSWER Debt Capital and Equity Capital
Debt Capital - ANSWER Funds from borrowing
Equity Capital - ANSWER Funds from firm's owners reinvesting
Financial Management questions and
answers with solutions
Financial Structure - ANSWER Chief Financial Officer, Vice President of Finance, Treasurer, and
Controller
Chief Financial Officer - ANSWER Leader of the financial team.
Reports to Chief Executive Officer.
May be on board of directors.
This person and CEO must certify accuracy of financial statements.
Vice President of Finance - ANSWER Makes recommendations to CFO for where to invest
capital.
Prepares financial forecasts, analyzes investment decisions, and specifies funds needed for a
time period: inflows and outflows.
Treasurer - ANSWER Responsible for financial activities, cash management, tax planning.
Controller - ANSWER Chief accounting manager.
Keeps books.
Prepares financial statements.
Risk-Return Trade-Off - ANSWER The goal is to maximize the wealth of the firm's shareholders
by striking the optimal balance.
Often decisions involving the highest potential returns expose the firm to the greatest risk.
, What is the purpose of a financial plan? - ANSWER To forecast and determine the specific
amounts and timing of expenditure and receipts.
The inflows and outflows and sources of funds.
What are the steps of preparing a financial plan? - ANSWER 1. Forecast of Sales or Revenue over
a time period
2. Profit forecast: Use the sales forecast to determine expected levels of profit for future
periods. Includes expenses, and payments to shareholders
3. Estimate how many additional assets the firm will need to support projected sales.
This information comes from the Sales Forecast (product you are going to sell).
Non-Sales Forecast (other ways the organization will generate income).
Asset Intensity (the increase in assets you'll need to meet the forecast).
Current Assets (also short term assets) - ANSWER Cash and cash assets that are expected to be
converted to cash within one year.
Examples: cash, marketable securities, inventory, accounting receivables.
Long-Term Assets - ANSWER Investments
Expansion
Replacing assets
What are the two types of funding? - ANSWER Debt Capital and Equity Capital
Debt Capital - ANSWER Funds from borrowing
Equity Capital - ANSWER Funds from firm's owners reinvesting
