Statistics and Risk
Management
Financial Resources
Video URL:
jukebox.esc13.net/untdeveloper/Videos/Financial%20Resources.mov
Vocabulary List:
Chief Financial Officer (CFO): The top-level risk manager in an
organization.
Profitability Ratios: The ratio between and expenses, as calculated by
Return on Assets (ROA), Return on Capital Employed (ROCE), Net Profit
Margin (NPM) and Net Asset Turnover (NAT).
Operating Profit Margin: The value determined by calculating operating
income divided by revenue.
Return on Assets (ROA): The value determined by calculating net income
divided by total assets.
Return on Equity (ROE): A ratio of a company’s earnings to its shareholder
equity in a given period of time (Forrest, n.d.).
Return on Capital Employed (ROCE): The value determined by calculating
Operating Profit divided by shareholder's equity.
Liquidity Ratios: Calculations used to determine a company’s ability to pay
off its short-term liabilities with available cash funds.
Debt Ratios: Calculations to find the ratio of debt to assets, or total debt
divided by total assets.
Forrest, E. (n.d.). Return on equity: A definition. Available from
http://faculty.cbpp.uaa.alaska.edu/afef/BA460Readings%20on%20Ratios.htm
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Resources:
The Importance of Financial Education
This article breaks down the importance of having a sound financial
education. It discusses how financial education is achieved, why financial
education is effective, financial literacy, and much more.
http://www.oecd.org/dataoecd/8/32/37087833.pdf
Beginners’ Guide to Financial Statements
Produced by the U.S. Securities and Exchange Commission, this article
breaks down the basics of financial documents. It provides easy to follow
information on balance sheets, income statements, cash flow
statements, and more.
http://www.sec.gov/investor/pubs/begfinstmtguide.htm
The Role of Accounting and Finance in Business
Accounting and finance lie at the heart of business. It is possible to
survive, for a while at least, without an effective marketing plan, poor
human resource management and a poorly designed business strategy.
http://cws.cengage.co.uk/ryan2/students/Chapter%20overviews/Chapter
%201.pdf
Chief Financial Officer – CFO
Understanding the role of the Chief Financial Officer and the key role this
office plays in maintaining order in an otherwise chaotic climate.
www.econ.ucsb.edu/~lowes/econ191fm/CFO.ppt
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Financial Resources Practice Test
Name:_____________________
MULTIPLE CHOICE: 1. A _______is an organized process for the exchange of capital and credit. a. Financial Return b. Financial Risk c. Financial Market 2. A _______is a profit earned from an investment. a. Financial Return b. Financial Risk c. Financial Market 3. A ________is the possibility that an expected profit will not be achieved. a. Financial Return b. Financial Risk c. Financial Market 4. Which of the following would NOT be a reason for businesses to maintain financial records? a. To track the financial progress of the business b. To provide financial information to competitors c. To prepare financial forms and reports required by the government d. To determine the kinds and values of its assets MATCHING: A. Liquidity ratios B. Efficiency ratios/Asset Activity ratio C. Leverage ratios D. Profitability ratios E. Debt ratio ______ _5. Indicate how effectively a company uses its resources to generate revenue _______6. Tell how much of each dollar of sales, assets, and stockholders’ investment resulted in bottom‐line net Profit _______ 7. Tell how well a company can pay off its short‐term debts and meet unexpected needs for cash _______ 8. Show how and to what degree a company has financed it assets ________9. Shows the amount of debt an organization is using to pay off the debt. SHORT ANSWER: 10. List three groups who would be interested in a business’ financial information: Copyright © Texas Education Agency, 2012. All rights reserved.
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Financial Resources Practice Test KEY
1. C
2. A
3. B
4. B
5. B
6. D
7. A
8. C
9. E
10.
Management and executives, stockholders, lenders, taxing
bodies, governmental agencies
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Student Assignment
10.1a The Finance Department
Name:_____________________
You are the CFO of a medium size natural gas exploration firm. You are
putting together a presentation to a group of potential inventors.
Create a slide presentation that you would use to persuade the investors
to invest in your firm. What is your audience interested in? What things
will you know as the CFO? Are ethics important to your job success?
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Student Assignment
10.2a Assessing Financial Information
Name:_____________________
You are a CFO of a very successful firm and have been assigned by the
Board of Directors to investigate the acquisition of Company XYZ. This
company will open a whole new line of products in a different industry for
your firm.
What will you be looking at to make your recommendations to the board?
List the areas of inquiry including what you will be looking for and why
you think that is essential for a diligent decision.
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Explore Activity:
Current News – Nearly all professions have organizations and magazines or
journals to help keep people up-to-date with news and practices in their
fields. Here you will find articles, on-line discussions, conference dates, job
postings, and much more.
As with many similar resources, much of the content is only available
through subscription or membership, but some content is available to
anyone. Take a look at some of the articles and choose five that interest
you. Then write a short summary of each article.
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