D076 Finance Skills for Managers

(1) In which way is accounting different from finance?
Accounting forecasts future performance, given the past, while finance records past performance.
Accounting is backward looking, while finance is focused on the future.
Accounting is about budgeting, saving, and borrowing, while finance is about investing, forecasting, and lending.
Accounting is focused on allocating capital, while finance is focused on bringing in capital.

2) What is the main question that both individuals and companies must consider when making financial decisions to reach a goal?
Will this decrease the amount of cash available?
Will this decision require debt or equity financing?
Will utility be maximized through this decision?
Will the benefits of the action outweigh the costs?

(3) A financial manager at a company is trying to determine whether to issue new stocks or new bonds to cover the costs of a project the company is doing the next year.
Which main task in business finance is this situation an example of?
Making financing decisions
Making investment decisions
Managing working capital
Managing interdepartmental loans

(4) How can investing help a person reach personal financial goals?
It provides a guaranteed future outcome in order to predictably meet financial goals.
expenses.
It helps a person understand how money was spent previously in order to reliably predict future
It provides access to potential revenue or increases in value to help meet goals faster.
It ensures money is placed in a safe, risk-free, and easily accessible financial asset.

Solution