Lesson 6 Objectives Understand what a financial plan is and its relationship to different types of budgets. Know the difference between debt and equity and how firms use financial leverage. Understand the trade off between risk and return for investments. Have a familiarity with the activities firm's use to manage risk. Understand how insurance works and have a familiarity with some basic types.
Advanced Organizer Question
Profit = Revenue - Cost
The financial plan spells out the overall financial strategy a business plans to utilize, it contains short and long range forecasts for the flow of financial resources, and it details budgets for the business to use to control the flow of resources. Financial Planning
Multiple Choice Question a. Margin = Price - Cost b. Profit = Revenue - Cost c. Sales = Profit X Quantity d. Owners Equity = Assets - Liabilities