Learning Unit 1 Flashcards

1
Q

Explain the primary roles the of financial manager

A
Financial planning and analysis
Investment decisions
Financing decisions
Cash management
Relationship management
Dividend decisions
Risk management
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2
Q

Explain financial planning and analysis

A
Forecasting and budgets
Available funds and future funding
Understand the key areas for sale and profit
Financial risks
Capital investment
Future investments

Financial forecast
Use historical information to predict what will happen

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3
Q

Explain investment decisions

A

Short term: ensue money is available for working capital
Medium and long term: for non-current assets

Decisions:

  • take on new projects
  • invest or sell ppe
  • embark on research and development
  • investments
  • embark on mergers
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4
Q

Explain financing decisions

A

Make decisions on now to fund the financial activities

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5
Q

Explain cash management

A

Ensure that sufficient cash funds we available as needed

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6
Q

What are the relationships the financial manager needs to take into account

A
  • Shareholders who provide funding
  • creditors
  • employee
  • government
  • customers
  • community
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7
Q

Evaluate the ethical considerations that underlie a financial manager’s conduct

A

What impact decisions have on shareholders rights, how shareholders rights will be remedied if they are violated. The effect on the mutual shareholder wealth maximization and relationships with shareholders as well as other stakeholders

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8
Q

Explain the agency relations and problem

A

Agency relationship describes the relationship between management and the shareholders, where by shareholders have delegated the authority ro manage the business to managers
The problem arises when the objectives of the financial manager we not aligned with that of the business

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9
Q

Explain the difference between profit maximization and shareholder wealth maximization

A

Profit maximization is where profit is measured by EPS they do not only materialise into cash flows ignores time value of money. Can understate cost and overstate revenue, it does nor take risk into account

Shave holder wealth maximization measures the current share price

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