Financial Management Interview Question & Answer
1: What is
Financial Management?
Ans:
Financial Management means planning, organizing, directing and controlling the
financial activities such as procurement and utilization of funds of the
enterprise.
2: What is the importance of Financial Management?
Ans:
Financial management is one of the most important aspects in business. In order
to start up or even run a successful business, you will need excellent
knowledge in financial management. So what exactly is this form of management
and why is it important? Read on to find out more.
3: What is
financial management example?
Ans: Financial management is defined as dealing with and analyzing money and investments for a person or a business to help make business decisions. An example of financial management is the work done by an accounting department for a company.
4: What are the financial
management functions?
Ans: Financial Management means planning, organizing,
directing and controlling the financial activities such as procurement and
utilization of funds of the enterprise. It means applying general management
principles to financial resources of the enterprise.
5: What are the
three types of financial management?
Ans: Financial Management takes financial decisions under
three main categories namely, investment decisions, financing decisions and
dividend decisions.
6: What is the
major role of financial management?
Ans: Financial managers are responsible for the financial
health of an organization. They produce financial reports, direct investment
activities, and develop strategies and plans for the long-term financial goals
of their organization.
7: What is the
time value of money?
Ans: The time value of money (TVM) is the concept that
money you have now is worth more than the identical sum in the future due to
its potential earning capacity. This core principle of finance holds that
provided money can earn interest, any amount of money is worth more the sooner
it is received.
8: What is Annuity?
Ans: Annuity is a series of even cash flows for a
specified duration.
9: What are the Types of Interest?
Ans: Two types of interest-
a. Simple Interest
* Simple
Interest = Po (I) (n)
* Po = Principle
Amount at year 0
* I = Interest
rate per annum
* N = Number of
years for which interest is calculate.
Formula for
calculating Future value
* FVn = Po + Po
(I) (n)
* FVn = Future
value at the end of "n" years.
b. Compound Interest or Future Value of Single
Amount
* CVn or FVn = Po
(1+I) n Or Po × CVIFn.i
* CVn or FVn =
Compound or Future value at the end of 'n' years
* Po = Principle
amount at years 0
* I = Interest
rate per annum
* n = number of
years for which compounding is done
* CVF = Compound
Value Interest Factor.
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