Tài liệu vấn đáp TACN2 đạt điểm cao, có thể sử dụng thi viết, mình thi đợt trước được 9,5 nhé mng Tài liệu soạn theo câu hỏi cô giáo cho và câu hỏi trong sách giáo trình chúc mọi người học tốt 1. What does the term “corporate finance” refer to? (Concept) CF is a broad term that is used to collectively identify the various financial dealings undertaken by a corporation.
UNIT 16: CORPORATE FINANCE Formatted: Font: Times New Roman, Font color: Auto What does the term “corporate finance” refer to? (Concept) - CF is a broad term that is used to collectively identify the various financial dealings Formatted: Font color: Auto undertaken by a corporation What is one of the main functions of corporate finance? - One of the core functions of reponsible CF is to make wise use of the financial Formatted: Font: Times New Roman, Font color: Auto Formatted: Font: (Default) Times New Roman Formatted: Font: (Default) Times New Roman, Font color: Auto resources available to the company What is the ultimate goal of corporate finance? - The general goal of corporate finance is to ensure that the company is achieving the maximum profits while incurring the minimum amount of expenditure What does corporate finance include? - Corporate finance includes planning, raising, investing and monitoring of finance in order to achieve the financial objectives of the company What sources of finance can financial managers of when they want to raise more capital? - Finance can be collected from many sources: banks, shares, debentures, financial Formatted: Font: (Default) Times New Roman institutions, creditors, etc How is the capital of a firm basically classified? - There are types of corporate capital: Fixed capital and Working capital How is fixed capital and working capital often used? - Fixed capital is used to purchase fixed assets like land, buildings, machinery, etc /ɪtˈset.ər.ə/ - Working capital is used to purchase raw materials It’s also used to pay the day-today expenses like salaries, rent, taxes, electricity bills, etc What are the tasks of financial managers in planning the finance? - The finance manager plans the finance of the company He takes decisions of questions like: + How much finance is required by the company? Formatted: Font: (Default) Times New Roman, Font color: Auto Formatted: Font: (Default) Times New Roman Formatted: Font: (Default) Times New Roman, Font color: Auto + What are sources of finance? + How to use the finance profitably? What are the tasks of financial managers in raising the finance? - The finance managers raise finance for the company Finance can be collected from many sources: banks, shares, debentures, financial institutions, creditors, etc 10 What are the tasks of financial managers in investing the finance? - The finance manager uses the finance to achieve the objectives of the company 11 What are the tasks of financial managers in monitoring the finance? - The finance manager monitors the finance of the company He has to minimize: + the cost of finance + the wastage and misuse of finance + and the risk of investment of finance - He also has to get maximum return of the finance and in general he has to make sure that there are assets on hand to maintain company operations 12 Functions of CF? - The functions may include the management of investment, creating and managing the process for issuing shares of stock or offering corporate bonds, and acquisitions of property or other companies, mergers, corporate restructures, or the selling of the company assets 13 What are the objectives of corporate finance? - Some main objectives of corporate finance are making wise financial resources, developing an operation budget for all financial needs of the company, working with other departments to track income generated from various operations and investments The general goal of corporate finance is to ensure that the company is achieving the maximum profits while incurring the minimum amount of expenditure UNIT 17: FUNDING THE BUSINESS What’s gearing? - Gearing (leverage) is the relationship between the company’s equity capital and long-term debt What are capital sources for companies to raise for their businesses? / How can a company raise capital? (2 ways of raising more capital) - There are main ways of raising more capital for a company: debt financing and equity financing What are capital sources debt financing? - A company can raise liabilities by issuing new bonds, using trade credit or borrowing money from banks or other financial institutions What are capital sources equity financing? - A company can increase its equity by issuing new shares, using reinvested earnings or selling parts of the company’s assets What does the high/ low gearing mean? - A high/low gearing ratio means the company has a greater/ smaller proportion of long-term debt How many forms of equity are there? (low gearing) - forms: owne’s capital, venture capital, unlisted security market, stock exchange What are advantages and disadvantages of owner’s capital? - Owner’s capital is the money invested by the owners of the company - Advantage: In successful times, the owners have a claim on all the net profits of the company - Disadvantage: Owner’s capital is the most exposed form of capital because: + A return is received only after all other calls on company profits have been satisfied + In the case of bankruptcy, the owner’s equity will be repaid only after everyone else including employees, creditors, banks, etc… has received what they are owed What are advantages and disadvantages of venture capital? - Venture capital is provided by the venture firms interested in financing high-groth company - Advantage: The advantage of venture capital is that the venture capital company doesn’t usually interfere in the running of the company - Disadvantage: However, the venture capital company usually demands a much faster and higher rate of return than an owner would expect from their own capital What are advantages and disadvantages of unlisted securities market? - Sometimes called the second or third market - The unlisted securities market has the advantage of allowing a company to raise money from outside investors without losing much control of the company - However, this source of funds is available to small and medium companies 10 What are advantages and disadvantages of stock exchange? (listed security market) - Stock exchange is available only to large companies - Advantage: The listed security market has the advantage of providing the long-term opportunity of raising capital by issuing fresh shares - Disadvantage: However, at least 25% of the equity must be in public hands there by reducing the control of the original owners 11 What are advantages and disadvantages of long-term loans? - Long –term loans provide companies opportunities to raise more capital - Advantages: In times of prosperity, long-term loans (a high gearing) can (will) give the owners much better returns because net profit will be a much higher percentage of equity after interest payments, on the long term debt - Disadvantages: However, in harder times, the owner’s earning will drop dramatically because interest payment soaks up most of the company’s profits 12 Is the higher fearing helpful or harmful to companies? - Both harmful and helpful 13 CFO obligations: Why is it necessary for the CFO to choose the proper gearing? - To meet long-term need for funds - To minimize the risks and losses to the Co., ensure its liquidity and debt repayment - To maximize the profitability and owners’ wealth 14 What finance managers need to to ensure a company’s long-term survival and prosperity? - Finance managers need to make decisions about the gearing of the company Formatted: Font: (Default) Times New Roman, Font color: Auto, Text Fill UNIT 18: MANAGEMENT OF WORKING CAPITAL How is profitability determined? - Profitability is determined in part by the way in which a company managers its working capital What is one of the principal functions of financial management in managing working capital? - One of the principal functions of financial management is to provide the correct amount of working capital at the right time and in the right place to realize the greatest return on investment How can working capital initially broken down?/ How many types of working capital are there? - Working capital can be classified in ways, they are permanent working capital and temporary working capital Permanent working capital is tied up in keeping the business flowing throughout the year While temporary working capital is needed from time to take account of seasonal, cyclinal, unexpected, fluctuations in the business Both types of working capital have three major applications: firstly inventories, secondly debtors and finally cash What is permanent working capital used for? (Purpose) - Permanent working capital is tied up in keeping the business flowing throughout the year 6.5 What is temporary working capital used for? (Purpose) - Temporary working capital is needed from time to take account of seasonal, cyclical or unexpected fluctuation in the business 8.6 Which type is usually for serviced from an overdraft facility? - Temporary working capital 9.7 What are major applications of working capital? - major applications: firstly inventories, secondly debtors and finally cash Formatted: Font: Times New Roman, Font color: Auto 10.8 What are inventories further divided into? - Inventories can be further divided into inventories of raw materials, work in progress and finished goods - These three can soak up an enormous amount of excess working capital if not well managed 11.9 What is the role of financial managers in managing inventories? - The finance manager has to minimize: + the stocks of raw materials (lượng nguyên liệu thô) + the level of the work in progress (lượng bán thành phẩm) + the quantity of finished goods (lượng thành phẩm) - Avoid the vicious circle in the business 12.10 What are debts further divided into? - Debtors consits of payment due to supplier and payment owed by customers 13.11 What is the role of financial managers in managing debts? - It’s the task of the finance manager to see that generous credit terms are negotiated with suppliers but minimal credit is offered to customers A balance must be achieved between getting and giving good credit terms to attract customers and maintain a positive relationship with suppliers on one hand, and minimizing cash outlay on the other hand 14.12 What is cash further divided into? - Cash is further divided into cash for normal and abnormal requirement 15.13 What is the role of financial managers in managing cash? - It’s the task of the finance manager to ensure that adequate cash is always available for meeting the company’s day-to-day debts and that there is also a small reserve on hand to meet contingencies 16.14 What is the vicious circle in the business? - The vicious circle in the business includes over-stringent cost control, disruption in production, failure to meet customer orders, loss of customer goodwill, and loss of sale 17.15 What will happen if working capital is raised without a corresponding rise in production or margins? - There will be a drop in profit 18.16 What happens to the production system of a company if its inventories are controlled too stringently? - Over-stringent control can lead to disruption in production caused by the delay in receiving raw materials, a failure to take account of costly price rises in the pipeline, a failure to keep the production volume required by future sales and resulting expensive and damaging effects on customer goodwill 19.17 What can cause the disruption in production? - The disruption in production caused by the delay in receiving raw materials 20.18 What does ‘just-in-time” philosophy refer to? - The ‘just-in-time” philosophy, developed in Japan, is aimed at reconciling these often conflicting interests and keeping inventory costs to a minimum Formatted: Font: (Default) Times New Roman, 14 pt Overstringent cost control :Kiểm soát Loss of sales Formatted: Font: (Default) Times New Roman Disruption in production Loss of customer goodwill thiện chí Failure to meet customer orders Formatted: Font: Times New Roman, Font color: Auto UNIT 19: MARKETING How to distinguish between selling and marketing? - By their objectives + The objective of selling is to produce the product first and then think how to sell it on the market + The objective of marketing is understand the market demand, then develope and create new products to satisfy customer’s needs and wants Why should the production department understand the marketing concept? - Because much of the work of marketing has been done before the final products or sevices come to existence What is selling concept? - The selling concept assumes the resisting consumers have to be persuaded by vigorous hard-selling techniques to buy non-essential goods and services Products are sold rather than bought What is marketing concept? - The marketing concept, assumes that the producer’s task is to find the consumer’s wants and fill them Producer makes products that will be bought In other words, you don’t sell what you make, you make what will be bought What are market opportunities? - Market opportunities are a profitable possibility of filling unsatisfied needs andof Formatted: Font: (Default) Times New Roman creating new ones in areas in which the company is likely to enjoy a differential Formatted: Font: (Default) Times New Roman, Font color: Auto advantage, due to its distinctive competencies (the things it does particularly well) Formatted: Font: (Default) Times New Roman, Font color: Auto - Market opportunities are generally isolated by market segmentation Why must the companies consider the existence of competitors? - Because competitors have to be identified, monitored and defeated in the search for loyal customers Why is market research important? 10 16.18 What does a balance sheet list? - It lists the company’s assets, its liabilities and shareholders’ funds 17.19 What a business’s assets include? - A business’s assets include debtors or accounts receivable 18.20 What assets include? - (gtr u23) 22.21 What liabilities include? - Liabilities include creditors or accounts payable 23.22 What is double-entry bookkeeping? - Double-entry bookkeeping is all transactions entered as a credit in one account and as a debit in another 24.23 What is the accounting equation? - Assets = Liabilities + Owners’ (or Shareholders’) Equity 25.24 What company net assets include? - (Company) net assets include share capital, share premium (GB) or paid- in surplus (US) and the company’s reserves, including the year’s retained profits 26.25 What is share capital?: money received from the issue of shares 27.26 What is share-premium?: any money realized by selling shares at above their nominal value 27 What is a company’s market capitalization?: the total value of its shares at any given moment, i.e the number of shares times their market price 28 Where is the flow of cash both in and out of the company recorded? - The cash flow statement (or the source and application of funds statement, or the statement of changes in financial position.) (other names) 20 28.29 What does a cash flow statement show? - A cash flow statement shows the flow of cash in and out of the business between balance sheet dates 29.30 What are sources of funds (cash in)? - Sources of funds include trading profits, depreciation provisions, sales of assets, borrowing, and the issuing of shares 30.31 What are applications of funds (cash out)? - Applications of funds include purchases of fixed assets or financial assets, payment of dividends, repayment of loans, and- in a bad year – trading losses 31.32 Shareholders’ equity or net assets are generally less than a company’s market capitalization because net assets not record items such as goodwill 21 Formatted: Font: Times New Roman, Font color: Auto UNIT 25: FINANCIAL ANALYSIS What is financial analysis? - Financial analysis is the selection, evaluation, and interpretation of financial data, along with other pertinent information, to assist in investment and financial decision making What are functions of financial analysis? - Financial analysis may be used internally to evaluate issues such as employee performance, the efficiency of operations, and credit policies, and externally to evaluate potential investments and the credit-worthiness of borrowers, among other things How many sources of financial data are there? What are they? 3.1 Formatted: Font: (Default) Times New Roman Financial statementdata - The primary source is the financial statement: The data provided by the company itself in its annual reports and required disclosures + Annual reports: the income statement, the balance sheet, the statement of cash flows and footnotes to these statements 3.2 Market data - Market data include: the market price of listed securities, stock price indices + Sources: the financial press and the electronic media daily (bang gia lightning) 3.3 Economic data - Another source of information is economic data such as the Gross Domestic Product (GDP), Consumer price index (CPI), consumer spending, producer prices, consumer prices, and the competition,… + Sources: Government and private sources 3.4 Company events - New product development, company regulation, accquiring another company, extraordinary losses,… 22 Formatted: Font: (Default) Times New Roman Formatted: List Paragraph, Space After: 10 pt, Line spacing: 1,5 lines, Outline numbered + Level: + Numbering Style: 1, 2, 3, … + Start at: + Alignment: Left + Aligned at: 1,27 cm + Indent at: 2,54 cm - Besides, in financial analysis you also need to examine events that may help explain the company’s present condition and may have a bearing on its future prospects What is a ratio/ financial ratio/ current ratio? - A ratio is a mathematical relation between one quantity and another - A financial ratio is a comparison between one bit of financial information and another - Current ratio is the comparison between current assets and current liabilities 4.5 How are financial ratios classified? - According to constructions and to operating performance and financial condition 5.6 According to constructions, how are financial ratios classified? - By construction financial ratios can be classified as a coverage ratio, a return ratio, a turnover ratio, or a component percentage • A coverage ratio is a measure of a company’s ability to satisfy (meet) particular obligations • A return ratio is a measure of the net benefit, relative to the resources expended • A turnover ratio is a measure of the gross benefit, relative to the resources expended • A component percentage is the ratio of a component of an item to the item 6.7 According to operating performance and financial condition, how are financial ratios classified? - There are six aspects of operating performance and financial condition we can evaluate from financial ratios: • A liquidity ratio provides information on a company’s ability to meet its short-term, immediate obligations • A profitability ratio provides information on the amount of income from each dollar of sales • An activity ratio relates information on a company’s ability to manage its resources (that is, its assets) efficiently 23 • A financial leverage ratio provides information on the degree of a company’s fixed financing obligations and its ability to satisfy these financing obligations • A shareholder ratio describes the company’s financial condition in terms of amounts per share of stock • A return on investment ratio provides information on the amount of profit, relative to the assets employed to produce that profit 24 UNIT 26: AUDITING What is auditing? - Auditing is an accounting function that involves in the review and evaluation of financial records How is auditing done? - Auditing is done by someone other than the person who entered the transactions in the records 2.3 What accountants to maintain an internal audit? ~ What are the tasks of internal auditor? a They continuously review operating procedures and financial records and report to management on the current state of the company’s fiscal affairs b Find out deviations from standard operating procedures c Make suggestions to management for improvements in the standard operating procedures d Finally, they check the accounting records in regard to completeness and accuracy, making sure that all irregularities are corrected a.e Overall, the internal auditors seek to ensure that the various departments of the company follow the policies and procedures established by management 3.4 What is the aim of internal auditors? (strength of internal audit) - Provide accounting controls against errors, as well as a division of duties to reduce the possibility of misappropriation - Provide in4mation for the management to: + Knows the current state of the company’s fiscal affairs + Knows deviations from standard operating procedures + Receives suggestions for improvement in the standard operating procedures 4.5 What weakness exists in the internal auditing system? 25 - If a report is unfavorable, it may not be shown to the person in management who can crrect the problem 5.6 What happens if management receive the incorrect information? - It can make unsuitable decision for the company 6.7 How can the management overcome this weakness? - Management must ensure that reports are received at all levels with an absolutely objective attitude Process: Information and established data -> accumulating and evaluating evidence -> competent, independent person -> reporting Classification: Internal and external audit 10 What different emphases can be placed on an internal auditor’s report? - The emphasis placed on different parts of the internal auditor’s report varies from Formatted: Font: company to company + In some orgs, the auditor’s major or even sole function is to report on the completeness and accuracy of the books of account - + In more progressive comp, greater attention maybe paid to the auditor’s suggestion 26 UNIT 27: INTERNATIONAL BUSINESS What countries benefit from world trade? - They can develop their economies, increase production of goods, meet market demands and raise business’s opportunities Why does international trade develop? - Because certain countries are able to produce some goods more efficietly than other countries What are factors of efficient production? - They are climate, nature sources, labor force, geographical location + Aa certain climate in particular country may allow that country to grow ogricultural products in abundance + Nnature sources such as oil or coal abundant in other countries + Countries with a large pool of unskilled laborers are able to produce products which are labor intensive more cheaply than countries with highly paid, skilled labor forces + Another factor is geographical location What is Adam Smith’s theory about? - Adam Smith theorized that in a free market, countries produce whatever they can most efficiently grow or manufacture, or what is of the greatest advantage to them The absolutely advantage What is David Ricado’s theory about? - David - Ricardo theorized that an exporting country does not have to be the most efficient producer of the product The comparative advantage Why governments control imports and exports? - The governments tries to control the imports to protect the domestic industry and provide employment for the population - The governments tries to control the exports because a country enjoys an advantage if it exports more than it imports Weath accrues to the exporting country 27 How governments control imports? - The governments restrict imports by imposing taxes and quota - There’re forms of import tariffs: + A specific tariff is a certain amount of tax for each unit of the product + An ad valorem tariff is based on the value of the product How governments control exports? - The governments have special program to encourage exports such as: + Provide marketing information + Establish trade missions + Subsidize exports + Provide tax benefits or incentives What is dumping? - Dumping is selling on a foregn market at a price below the cost of production 10 What are similarities and differences when imposing taxes and quotas? - The similarity (common effect): increase the price of the products - Differences effects: + under tariffs: supply is not limited + under quotas: supply is limited 11 What is a floating exchange rate? - A floating exchange rate is the kind of exchange rate which fluctuates according to market forces 12 What is the balance of payment?: The amount of money that goes in and out of a country 13 When does a country have a balance of trade surplus? - Trade surplus: if a country is exporting more than it imports 14 When does a country have a balance of trade deficit? - Trade deficit: if a country is importing more than it exports 15 What is a multinational company? 28 - A multinational company is lagre company setting up production facilities in several different countries 16 What is a parent company?: A parent company is a company which owns a subsidiary 17 What is a subsidiary?: An enterprise controlled by a larger company through the ownership of greater than 50% of it voting stock 18 Why exporting countries sometimes set up subsidiaries in the market countries? - Because the comparative advantages which exporting countries enjoy sometimes change Transportation costs may increase or currency exchange rates may change 19 Effects of encourage exports: dumping Effects of restrict imports: + Increasing the price of the items + Raising revenue for the gov + Controlling consumption through market forces 20 Explain how exporting countries become wealthy? - …for raising/ receiving money for selling exports 21 What are forms of protectionism? - Tariffs and quotas 22 What is FOB? - The free on board (FOB) method is the cost of the product as it leaves the exporting country 23 What is CIF? - The cost insurance freight (CIF) method adds the value of place utility to the cost of the product 24 What would be a good reason for an exporting company to set up a subsidiary in the country that imports its products? - Saving transportation costs 29 25 Why might a country encourage foreign investment or the establishment of subsidiaries? - To develop its economy - Provide employment for its porpulation - To lower reserve requirements - To lower the balance of trade deficit They choose to operate in those countries that afford them comparative advantages 30 UNIT 29: TRADE BARRIERS What are trade barriers? - Trade barriers are any of a number of government – placed restrictions on trade between nations What are common sorts/ types of trade barriers? - There are most common trade barriers: tariffs, quotas, subsidies and embargoes - Tariffs are simply taxes placed on imports A tariff is added to the price of the imported goods This leads to fewer imports purchased, and then more domestic production is sold - Quotas on imports are designed to restrict imports and promote exports A quota is simply a quantity restriction placed on a good, service, or activity - Subsidies are another of the common trade barriers and are often placed to protect domestic industries Subsidies may actually be intended to make certain key goods affordable to citizens of the nation, but it can make non-competitive - An embargo can be seen as the most extreme of the trade barriers Embargoes basically prohibit the import or export of anything with another country What does the term free trade mean? - The term free trade refers to the theoretical removal of all trade barriers, allowing for completely free and unfettered trade What are advantages and disadvantes of trade barriers? - Advantages: Domestic firms get benefit with higher sales, greater profits, and more income to resource owners - Disadvantages: domestic consumers bear disadvantages with higher prices, limited access to imports Why is every nation in the global economy impose trade barriers? - There are reasons for imposing trade barriers: + The first is to protect domestic employment 31 + The second is for other countries in the foreign sector gain a comparative advantage due to low wages paid to their workers + Thirdly, trading barriers protect relatively young domestic industries that are not mature enough or large enough to compete with larger, more mature foreign producers + Fourly, it prevents business from dumping + Finally, trade barriers are often needed to protect firms and industries that produce output vital to the security and defense of the nation 32 UNIT 30: TRADE SURPLUSES AND DEFICITS How many measures of trade are there? - There are four measures of trade: the merchandise trade balance, the current account, the capital account and the balance of payments + The merchandise trade balance looks only at visible goods + The current account includes a country’s exports and imports of services, in addition to its visible trade + The capital account includes all the payments and transfer of funds + The balance of payment What is the narrowest measure of a country’s trade? - The merchandise trade balance What is a better measure of trade? Why? - The current account is a better measure of trade because it includes a country’s exports and imports of services, in addition to its visible trade What does the current account tell us? - The current account tells us which countries have been profitable traders, running a current account surplus with money in the bank at the end of the year, and which countries have been unprofitable traders, having imported more than they’ve exported, running a current account deficit, or spending more than they’ve earned What can a country if it runs a current account surplus? - A country with a current account surplus, it can use the extra money to invest abroad, or it can put it in its cookie jar of foreign currency reserves What can a country if it runs a current account deficits? - A country running a current account deficit has to look abroad for loans or investments or be forced to dip into its own reserves to pay for its excessive imports What is the widest measure of a country’s trade? - is called its balance of payments 33 What does the balance of payment include? - It includes not only payments abroad, but the goods, services, and all transfers of funds that cross international borders 34 ... inventories? - The finance manager has to minimize: + the stocks of raw materials (lượng nguyên liệu thô) + the level of the work in progress (lượng bán thành phẩm) + the quantity of finished