What is the primary goal of financial management in a business?
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Financial management aims to maximize the value of the firm while ensuring financial stability and profitability.
Which financial statement shows a company’s profitability over a period?
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The income statement (or profit and loss statement) displays revenues, expenses, and net income over a given period.
What is the purpose of budgeting in financial planning?
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A budget helps allocate resources effectively, plan expenditures, and monitor financial performance.
Which metric indicates how efficiently a company uses its assets?
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Return on Assets (ROA) measures how effectively a company generates profit from its assets.
What does working capital represent?
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Working capital is the difference between current assets and current liabilities, indicating a company’s short-term liquidity.
Why is cash flow management important in business?
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Positive cash flow ensures a business can meet obligations, invest in growth, and avoid insolvency.