The First Step in Financial Planning Is To

question 61

Multiple Choice

The first step in financial planning is to:

• A)define one's financial goals.
• B)set up a budget.
• C)calculate one's liquidity ratio.
• D)prepare a trend analysis.
• E)list expenses.

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Definitions:

Long-Term Investment

An asset that a company intends to hold for more than one year for the purpose of generating revenue.

Common Stock

Equity shares of a corporation that provide voting rights and represent a claim on a portion of the company's profits in the form of dividends.

Net Income

The amount of money left over after all expenses and taxes are subtracted from total revenue.

Acquisition Cost

The total cost incurred to acquire an asset, including the purchase price and all other expenses necessary to bring the asset into its intended use.