FM 1

Question 1

What is the goal of FM?

Answer 1

efficient acquisition and
deployment of both short- and long-term financial resources, to ensure the
objectives of the enterprise are achieved

Question 2

Investment appraisal considers short-term or long-term plans? Tell more about it.

Answer 2

Long-term. Identifies right projects(appraisal itself means assessing), ensure
financial objectives are met, usually, projects involve the purchase of non-current assets.

Question 2

Decisions must be taken in three key areas. What are they?

Answer 2

investment, finance and dividends

Question 3

What is Working capital management?

Answer 3

concerned with the
management of liquidity: ensuring debts are collected, inventory
levels are kept at the minimum level , cash balances are invested appropriately and payables are paid on a timely basis

Question 4

Financing decision

Answer 4

Before a business can invest in anything, it needs to have some
finance. A key financial management decision is the identification of the
most appropriate sources (be it long- or short-term), taking into account
the requirements of the company, the likely demands of the investors and
the amounts likely to be made available.

Question 5

What is working capital?

Answer 5

helps plan for future needs and ensure the company has enough cash and cash equivalents meet short-term obligations, such as unpaid taxes and short-term debt

Question 6

The dividend decision

Answer 6

The final key decision for the financial manager is
whether to return any of that cash to the owners of the business (in the
form of dividends) and if so, how much should be distributed, e it can
be invested again to earn further returns

Question 7

What is the main fin.objective?

Answer 7

Shareholder wealth maximization

Question 8

(EPS) growth

Answer 8

it represents that investor’s share of the income generated by the company::::::::
pat and preference share dividends/#shares issued, a measure of profitability, not wealth generation, does not represent the income of the shareholder,

Question 9

Difference between maximizing and satisficing

Answer 9

-seeking the maximum level of returns, even though this might involve exposure to risk and much higher management workloads.
-finding a merely adequate outcome, holding returns at a satisfactory level, avoiding risky ventures, and reducing
workloads

Question 10

Internal stakeholders

Answer 10

employees and managers/directors

Question 11

Connected stakeholders

Answer 11

x equity investors (ordinary shareholders)
x customers
x suppliers
x finance providers (debt holders/bankers)
x competitors

Question 12

External stakeholders

Answer 12

x the government
x the community at large
x pressure groups
x regulators.

Question 13

principal agent problem

Answer 13

act in their own selfish interests rather than pursuing the
objectives of the principal

Question 14

Corporate governance codes: executive directors

Answer 14

–separation of chairman and chief executive officer (CEO)
– submit for re-election
– clear disclosure of financial rewards

Question 15

Corporate governance codes: NED

Answer 15

NED-– important presence on the board
– must give obligation to spend sufficient time with the company
– should be independent.
– at least half the board to be independent NEDs

Question 16

name and explain 3Es

Answer 16

Economy: Minimising the costs of inputs required to achieve a defined
level of output.
Efficiency: Ratio of outputs to inputs – achieving a high level of output in
relation to the resources put in (input driven) or providing a particular level
of service at reasonable input cost (output driven)
Effectiveness: Whether outputs are achieved that match the
predetermined objectives.