Finance Function

Question 1

What is Treasury responsible for?

Answer 1

Treasury are responsible for raising finance and controlling financial resource:

Corporate finance
Liquidity management
Funding management
Currency management

Collects all necessary information to enable best use of the organisation’s assets

Question 2

What is the formula for Earnings per Share?

Answer 2

Earnings per Share =

Profit after Tax (less pref divs)
——————————————
Weighted average no of ordinary shares

How much profit is attached to each share

Question 3

What is the formula for Price / Earnings Ratio?

Answer 3

Price / Earnings Ratio =

Share Price
———————
Earnings per Share

High PE ratio suggests shareholders are prepared to pay a high price for shares

Question 4

What is the formula to calculate Dividend Yield?

Answer 4

Dividend Yield =

Dividend per share
————————— x 100%
Current Share Price

Percentage return that a shareholder receives on their investment

Question 5

What are the four themes of BPR (Business Process Re-engineering)?

Answer 5

Hammer and Champy identify:

Process reorientation - focus on resources, tasks and constraints

Creative use of IT -

Ambition - don’t be restricted by current ways of working

Challenge and break rules