Senior Management Decisions

Question 1

What is project management

Answer 1

Project that is:

-unique/one off
-achieve a specific objective
-Definite beginning and end
-comes with uncertainty

Question 2

What is the project life cycle?

Answer 2

-Initiating (assess the feasibility/risk)

-Planning (plan for risk, decide timeline, breakdown project)

-implementing (maintain control, change and disruption)

-Controlling (deploy resources e.g no of staff)

-Closing (conduct post completion, deliver project to customers/users)

Question 3

What are characteristics of high performing teams?

Answer 3

-Establish clear goals and objectives
-Participation
-strong leadership/expertise
-innovativion/new methods

Question 4

What is finance life cycle of a business?

Answer 4

-Concept
-Start up
-Growth
-Later/Mature stage
-End stage/Decline

Question 5

What are sources of equity finance?

Answer 5

Retained Earnings

+its flexibile (can repay later)
+no fixed cost commitment
+no special processes

-Can disappoint investors who want dividend
-can cause loss of control of balance sheet of company
-depends on firm having positive cash flow

Question 6

Another source of equity finance?

Answer 6

-Rights to New issues (offering more shares)

+no cash flow costs to pay interest
+Capitalises on market sentiment and support

-Dilutes existing shareholders
-hard to repay if capital not needed
-may reduce share price

Question 7

What is a source of debt finance?

Answer 7

-bank loans (1-7 yrs)

+Lower cost if secured on asset
+interest roll up possible
+may be fixed rate of interest

-restricts asset use and sale
-restrictions from lenders (borrowing amounts)

Question 8

What is another source of debt finance?

Answer 8

-Bond Markets

+Competitive rates
+Can be secured on tangible/intangible assets

-requires intial admission to markets
-Needs good credit rating and trading record