FM- Ch. 1

In relation to the financial management Of a company, which Of the following provides the

best definition Of a firm's primary financial objective?

• TO achieve long-term growth in earnings

• To maximise the level of annual dividends

• TO maximise the wealth Of its ordinary shareholders

• To maximise the level of annual profits

Which THREE of the following are the main types of decision facing the financial manager

in a company?

• Income decision

• Investment decision

• Dividend decision

• Financing decision

• Appraisal decision

Which TWO of the following are examples of financial objectives that a company might

choose to pursue?

• Dealing honestly and fairly with customers on all

• Provision of good working conditions and industrial relations

• Earning above a particular level of return on capital employed

• Producing environmentally friendly products

• Restricting the level of gearing to below a specified target level

Value for money is an important objective for not-for-profit organisations.

Which of the following actions is consistent with increasing value for money?

• Using a cheaper source Of goods and thereby decreasing the quality Of not-for-profit

  organisation services

• Searching for ways to diversify the finances of the not-for-profit organisation

• Decreasing waste in the provision of a service by the not-for-profit organisation

• Focusing on meeting the financial objectives Of the not-for-profit organization

Which Of the following is LEAST likely to fall within financial management?

• The dividend payment to shareholders is increased

• Funds are raised to finance an investment project

• Surplus assets are sold off

• A report is produced comparing actual results to budget

Which of the following tasks would typically be carried out by a member of the financial

management team?

• Evaluating proposed expansion plans

• Review Of overtime spending

• Depreciation of non-current assets

• Apportioning overheads to cost units

Which TWO of the following are examples of internal stakeholders in a firm?

• Company directors

• Customers

• Suppliers

• Employees

• Finance providers

What is the main purpose of corporate governance?

• To separate ownership and management control of organisations

• To maximise shareholder value

• To facilitate effective management of organisations and to make organisations more

  visibly accountable to a wider range of stakeholders

• To ensure that regulatory frameworks are adhered to

The agency problem is a driving force behind the growing importance attached to sound

corporate governance.

In this context, who are the agents?

• Customers

• Shareholders

• Managers

• Auditors

Which TWO of the following are 'efficiency' targets that a not for profit organisation might

put in place?

• Reduction Of wastage Of paper

• Pay rates for staff Of appropriate levels Of qualification

• Staff utilisation

• Customer satisfaction ratings