Wk 1 Financial Objectives & Corp Strategy

Question 1

What are the 5 major roles of a Finance Manager?

Answer 1

1. Interaction with financial markets: Shareholders, Debtholders etc.
2. Investment: Decisions regarding best use of cash to increase value
3. Treasury Management: I.E management of Cash
4. Risk Management: Exposure to exchange rate movements, risk of default of debtors etc.
5. Strategy and Value Based Management

Question 2

What are the 3 Financial Decisions?

Answer 2

• Financing Decision
• Allocation Decision
• Dividend Decision

Question 3

What falls under the Financing Decision?

Answer 3

• Raising funds for investment
• Mix of debt/ equity and other fund sources

Question 4

What falls under the Allocation (investment) Decision?

Answer 4

• Where to invest resources of the firm?
• How to determine the worth of an investment

Question 5

What falls under the Dividend (rewarding) Decision?

Answer 5

• How much should be reinvested?
• How much should be paid out to shareholders?

Question 6

What two ways can profit be increased?

Answer 6

• Growing the business i.e. sales
• Improving the margin