Finance Skills for Managers - D076 Questions and Answers Graded A

Accounting ✔✔The system of recording, reporting, and summarizing past financial information
and transactions.
Accounts Receivable Turnover (AR Turnover) ✔✔An activity ratio found by credit sales divided
by accounts receivable.
Activity Ratios ✔✔A category of ratios that measure how well a company uses its assets to
generate sales or cash, showing the firm's operational efficiency and profitability.
Additional Funds Needed (AFN) ✔✔Another name for the discretionary financing needed or
external financing needed. It represents the additional financing needed given a firm's
expectations for future growth.
Affirmative Covenants ✔✔A bond covenant that describes things the company pledges itself to
do in order to protect bondholders.
Agency Costs ✔✔Costs that are incurred when management does not act in the best interest of
shareholders.
Agency Problem ✔✔When the agent (the management) does not act in the best interest of the
principal (the owners).
Aggressive Assets ✔✔Companies or securities with beta greater than 1.
Annual Percentage Rate ✔✔The annual interest rate that is charged for borrowing money or that
is earned through investment.
Annuity ✔✔A stream of cash flows of an equal amount paid every consecutive period.
Annuity Due ✔✔A series of equal payments made at the beginning of consecutive periods.
Asset Pricing ✔✔The process of valuing assets.