ACFI205- LECTURE 1 Introduction to Financial Management & Financial Planning 2023 Update 100% Rated

Roles of a manager - ANS-- strategic management: develop objectives and formulate long-term strategy to meet those objectives - operations management: day-to-day control over various bs functions - risk management: identify and properly manage risk faced by a business Finance function of a business - ANS-- Financial planning - Investment project appraisal - financing decisions - capital market operations - financial control Financial planning - ANS-making sure everything is profitable in the future by preparing different projected statements Investment project appraisal - ANS-assessing the profitability and riskiness of diff projects and then choosing whether to accept, reject or prioritize which one. financing decisions - ANS-identify and assess diff sources of finance. achieve appropriate balance between long term and short term finance capital market operations - ANS-understanding issues in raising finances from financial markets such as pricing of a loan and share capital. financial control - ANS-monitoring plans that are put into action eg checking profitability of investment projects, checking levels of working capital, monitoring performance and taking corrective measures whenever appropriate primary objective of the firm - ANS-value maximization wealth can come in 2 forms - ANS-dividend and price appreciation (increase in share price) profit maximization vs value maximization - ANS-Profit maximisation is a vague concept that does not adequately capture all aspects of shareholder wealth what does profit maximization lack in? - ANS-- lack of precision: profit maximization focuses on maximizing profit, but what profit in speicfic? operating profit? net profit? profit before or after tax? - lack of objectivity: only talks about profit but doesn't consider other things like depreciation, inventory levels, bad debts Continues...