MODULE 1 - Introduction to Financial Management

Question 1

The business function deals with investing the available financial resources in a way that greater business success and return in investment in achieved.

Answer 1

Financial Management

Question 2

What are the three primary objectives of Financial management

Answer 2

(1) Reduce cost of finance
(2) Ensures sufficient availability of funds
(3) Deals witht planning, organizing anf controlling of financial activities

Question 3

Finance management is a long term decision-making process which involves lot of planning, allocation of funds, discipline and much more.

Answer 3

Nature of Financial Management

Question 4

Financial management involves analyzing money and investments to make the right decisions for long and short term.

Answer 4

Purpose of Financial Management

Question 5

• It is important the financial decisions take care of the shareholder’s interest
• Maximization of the wealth of the shareholders, which depends on the increase in net worth, capital invested in business and profit for the growth and prosperity of the organization.

Answer 5

Scope of Financial Management

Question 6

Three Major Decisions involve in Financial Management

Answer 6

(1) Financing Decision
(3) Investment Decision
(3) Dividend Decision

Question 7

An important phase in the business enterprise. Will the entire structure of strategies, policies and plans of a company rest.

Answer 7

Objective Setting

Question 8

Example of Objectives

Answer 8

(1) Goal of the company to be a leader in technology and industry
(2) To achieve profit through a high-level manufacturing

Question 9

A long-range in scope and has its focus on the organization as a whole.

It reflects how it plans to achieve its goals and obejctives.

Answer 9

Strategic Planning

Question 10

• Maximization of return on capital
• Minimization of expenses
• Efficient utilization of long term and short term funds

Answer 10

Short term goals

Question 11

• To survive and have sustained growth of the firm.

*Growth in market value of the equity shares through maximization of the firm’s market share

Answer 11

Long term goals

Question 12

Financial Objective for the Owner

Answer 12

to maximize the shareholder or owner’s weatlh.

Question 13

Financial Objective for the stakeholder

Answer 13

to emphasize social responsibility

Question 14

• Considers the risk and time value of money
• Considers all future cash flows
• Financial Decisions are taken with a view to improving the capital appreciation of the share price.

Answer 14

Wealth Maximization Goal