Introduction to Business Dersi 8. Ünite Sorularla Öğrenelim

What are Business finance decisions related to?

Business finance decisions are related to the resources of a business and they can be grouped as investment decisions, financing decisions and operating decisions.

How can the main sources of finance for companies be grouped ?

The main sources of finance for companies can be grouped as:

• Internal Funds

• External funds

What does the combination of internal funds and external funds create ?

The combination of internal funds and external funds creates the financing
structure, in other words the capital structure of the company.

What are financial markets?

Financial markets are institutions and procedures which facilitate the transfer
of funds through financial transactions involving financial claims.

What are the functions of Financial Markets?

• Efficient allocation of capital

• Price discovery

• Liquidity

• Risk Sharing

What do money markets include?

Money markets include short-term securities like commercial paper and
treasury bills

What can working capital be financed by?

Working capital can be financed by:
• Accrued wages and salaries,
• Accrued taxes,
• Short-term loans provided from commercial banks, finance companies or factors,
• Issuing

What is the feature of ''Pro forma income statement''?

Pro forma income statement exhibits forecasted revenues and expenses for a
future period.

What is the feature of ''Pro forma balance sheet''?

Pro forma balance sheet displays forecasted assets and total financing provided by debt and equity financing at a future date.

How do companies usually finance their long-term assets?

Companies usually finance their long-term assets with long-term resources such as long-term trade credit extended by their suppliers, long-term leasing, long-term bank loans, or by issuing bonds or stocks.

What is ''Capital lease''?

Capital lease is a lease agreement by which the lessee rents the property and
makes regular payments to the lessor for a specified number of months or years.

What is ''Preferred stock''?

Preferred stock is a hybrid security.

What does ''The capital budgeting process'' involve?

The capital budgeting process involves economic analysis and selection of projects according to some criteria determined by the management of the company

How can Investment decisions be grouped ?

Investment decisions can be grouped as:
1. Assessing the profitability of a single investment project.
2. Assessing the relative profitability of competing investment projects.
3. Selecting the best investment projects in a
portfolio of projects with a limited budget.

What is the relationship between risk and return?

There is a positive relationship between risk and return. Investors will not be willing to assume additional risk unless they expect to be compensated with additional return.

How can basic types of risk for a business be classified ?

Basic types of risk for a business can be classified as:

• Credit risk (Default risk)

The risk that a company or individual will not be able to pay the contractual interest or principal on its debt obligations.

• Market risk

The risk that the value of an investment to fluctuate due to general market conditions.

• Political risk

The risk that a country’s government will suddenly change its policies.

• Operational risk

Various risks that can arise from a company’s ordinary business

What does Investment Portfolio include?

Government bonds, Stocks, Corporate bonds

Who can the Shareholder value be improved with?

Shareholder value can be improved with the help of Chief Risk Officer
(CRO).

What is the role of financial decisions in creating shareholder value ?

We can analyze the role of financial decisions in creating shareholder value by grouping them under different aspects.

-Investing aspect of value creation

-Financing aspect of value creation

-Operating aspect of value creation

What is Economic Profit or Economic Value Added (EVA) ?

Economic Profit or Economic Value Added (EVA) is a form of economic profit

What do Capital Markets Board of Turkey’s Corporate Governance Principles consist?

Capital Markets Board of Turkey’s Corporate Governance Principles consist of four main sections, namely

shareholders,

disclosure and transparency,

stakeholders and board of directors

What are the main stakeholders of the business ?

The main stakeholders of the business are customers, suppliers, employees,
environment, government, competitors, investors and the society.

What do the implementation of internal controls involve ?

To fight against fraud and corruption, companies can establish internal control systems. Typically, implementation of internal controls involve the following steps:

• Identification of possible internal and external threats,
• Identification of internal processes,
• Identification of process gaps using control assessment tools,
• Implementing internal controls to fill gaps with strong control processes,
• Testing the controls with an early warning system.