Financial Management Interview Question and Answer

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.