Financial Management & Financial Objectives

What is the primary financial objective of a company?

• Maximise profit

• Maximise sales

• Maximise shareholders’ wealth

• Minimise costs

Which of the following is NOT a financial performance metric?

• Earnings per share (EPS)

• Dividend per share (DPS)

• Employee satisfaction

• Gearing level

Which valuation method is based on the book value of assets?

• Market value method

• Break-up basis

• Statement of Financial Position (SOFP) valuation

• Dividend valuation

When is the break-up basis method most appropriate?

• When the company is growing

• When the company is liquidating or selling assets

• When shares are actively traded

• When profits are increasing

How is Total Shareholder Return (TSR) calculated?

• (P₁ − P₀) / P₀

• (P₁ − P₀ + D₁) / P₀

• D₁ / P₀

• P₁ / P₀

Why is Profit Before Interest and Tax (PBIT) often preferred in analysis?

• It includes tax effects

• It reflects shareholder dividends

• It excludes financing and tax effects

• It is always higher than net profit

Which ratio measures how efficiently a company generates profit from its capital employed?

• ROE

• ROCE

• EPS

• Current ratio

A high ROE may indicate:

• Poor profitability

• High liquidity

• Efficient management or high debt levels

• Low risk

Which of the following is a liquidity ratio?

• Debt ratio

• Current ratio

• ROCE

• PE ratio

What does a high Price Earnings (PE) ratio generally indicate?

• Low future growth

• High dividend payout

• Positive market expectations of future growth

• Poor company performance