You can say that hedging is similar to having insurance where you pay a certain premium and get assured compensation. However, the amount of risk hedging reduces results in a similar reduction in the potential profit. We do so by taking an opposite position in a related asset. It is the capital that has preference over equity capital at the time of dividend payment.Īns: Hedging is a risk management strategy we implement to offset losses in investments. This is a hybrid method of financing the firm as it offers some features of debentures and some features of equity. What do you Mean by Preference Capital?Īns: In simple words, preference capital refers to the amount raised by issuing preference shares. Can a Company Show Positive Cash Flows While Facing Financial Problems?Īns: Yes, a company can show positive cash flows even while facing financial trouble through impractical enhancements in working capital (delaying payables and selling inventory) or by not letting revenue go forward in the pipeline.Ħ. Earn Masters, Executive PGP, or Advanced Certificate Programs to fast-track your career.ĥ. Learn Online MBA Courses from the World’s top Universities. This is essentially what a cash flow statement looks like. Finally, the cash balance at the beginning of the period and the change in cash lets you arrive at the cash balance of the period’s end. Then, you need to add cash flows from investments, operations, and financing to get the total change in cash. After getting the cash flow from investments, you’ll need to mention issuance or repurchase of equity and debt and paying out dividends to arrive at finances. Now, you will have to mention capital expenditures, purchase of intangible assets, purchase or sale of investment securities, and asset sales to arrive at cash flow from investments. This is the primary difference between an asset and an expense.Īns: First we start with net income, proceed line by line while making adjustments to arrive at cash flows from operations. For example, a new branch would make a lot of money for the firm for a long while but an employee’s work will only benefit until the time of paying the wages and that’s why they create an expense. Why do Capital Expenditures Increase Assets When other Cash Outflows don’t and Instead Create Expenses?Īns: Capital expenditures are capitalized because they give benefits to the firm for a substantial amount of time. It tells you how much cash is tied up in the business through inventories and receivable and how much cash you need to pay off the business’s short term obligations (in the coming 12 months).Īlso Check, Management Essentials Bootcamp from upGradģ. How can a Company Show Positive Net Income but go Bankrupt?Īns: A company can show positive net income while facing bankruptcy by deteriorating working capital (by enhancing accounts receivable and reducing accounts payable) and financial tactics.Īns: Working capital is the amount you get after deducting current liabilities from current assets. Beginner-Level Finance Interview Questionsġ. To better your knowledge and improve your personal notes with finance question and answer pdf, you can also check out excellent finance programmes launched by upGrad. Doing so will give you your personalized and unique MBA finance interview question and answer pdf. You can take note of these questions and curate your very own finance question and answer pdf. You can also check out our free courses offered by upGrad in Management, Data Science, Machine Learning, Digital Marketing, and Technology.īelow are some of the most asked finance questions categorized into three difficulty levels. By going through all these questions, you’ll have a better sense of what to expect from the interviewer in a finance interview. We have covered all levels of finance interview questions – beginner, intermediate, and advanced – to offer you a comprehensive idea of the finance domain. If you were wondering how to prepare for a finance interview, look no further because this article will cover the most commonly asked finance interview questions. Read the full article to know more in detail on Beginner, Intermediate and advanced level Finance Interview Questions and answers.
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