Each question is required to have organized and well thought out responses in Es

Question

Each question is required to have organized and well thought out responses in Essay format with a minimum of 2 paragraphs.

1- What is Financial Management? What is the primary goal of Financial Management?

2- What is the difference between the following?

“Macroeconomics” and “Microeconomics”?

3- What is the difference between “Classical” and “Keynesian” Economics?

4- Who leads a corporation from a finance standpoint? What are their responsibilities?

5- What role does the Federal Reserve play as a financial institution in the overall economic and financial well being of the U.S.?

6- What would happen to the U.S. standard of living if people lost faith in the safety of the financial institutions? Explain.

7- How do airlines benefit from acquisitions of other airlines? How does it affect the market? How does it affect the consumer? How does it affect the share holders?

8- What is the function of Financial Statements? Who is interested in Financial Statements?

9- There are Four Key Financial Statements:
Income Statement (also known as Profit / Loss, or Statement of Operations)
Balance Sheet
Cash Flow Statement
Stockholders' Equity Statement

10- Please describe what each statements details.

“Cash is King” and operating cash flow is the lifeblood of a company and the most important barometer for investors.

A company that does not generate cash over the long term is on its way out. Which 3 Strategies to increase cash flow do airlines utilize?

11-Explain the aspects of financial diversification and why Companies use financial diversification to limit business risk. Is financial diversification the only cure-all for the disease known as business risk?

Explanation / Answer

1) Financial management is concerned with optimal procurement as well as usage of finance. For optimal procurement different sources of finance are identified and compared in terms of their cost and associated risk. Finance which is procured should be invested in such a manner that the return from the investment exceeds its cost.

Primary goal of financial management is reducing the cost of funds procured from different sources. It also ensures that availability of enough funds in the business whenever required and no idle funds in the business it means optimum utilization of funds. The future business of an enterprise is depending upon the quality of financial management.

2) Difference between Macro and Micro Economics

In Micro economics we study individual economic units or a small group of units, like individual household, individual firms etc,but in macro-economic we study economy as a whole for example in macroeconomics we study problem of all firms .Micro economics is concerned with allocation of resources while macroeconomics is concerned with full employment and growth of resources.

In Micro economics problems and decisions are mainly influenced by prices but in macroeconomics problem and decisions are mainly influenced by income.

Examples of Micro Economic variable are Demand of a consumer, supply of a firm, price charged by the firm etc.

Examples of Macroeconomics variables are Aggregate demand, aggregate supply, national income, price level etc.

3) Both classical and Keynesian economics are based on certain assumptions.Claasical economy assumes that economy is full of employment wile Keynesian economy assumes that economy is not of full employment. Classical economy assumes that wages and prices are very flexible but Keynesian economy assumes that prices and wages are rigid.Fisical and monetary policy is not needed as per classical economics but it is needed as per Keynesian economies. As per classical economy in case of demand increases production is not increases but increases prices of products, but as per Keynesian economy due to increase in demand production will also increases.

Aggregate Supply curve is vertical in case of classical economics but is upward sloping in case of Keynesian economics.

4) CFO is responsible for taking financial decisions of an enterprise.CFo is responsible for cash flow position of an enterprise. It decides what are sources and uses of finance and its optimum utilization. It also settles timely payment of all liabilities of the company. Company’s performance is also measured wit CFO’s performance because all financial decisions impact the performance of the company . It is also responsible for Board of directors of the company. It also supervise various departments of an enterprise and establish relations with bankers, shareholders etc.

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