WorksheetsFM - Introduction to Financial Management
Total questions: 20
Worksheet time: 32mins
Which of the following statements describes the main objective of financial management?
Efficient acquisition and deployment of financial resources to ensure achievement of objectives
Providing information to management for day to day functions of control and decision making
Providing information to external users about the historical results of the organisation
Maximisation of shareholder wealth
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.
Non-executive directors are appointed to the remuneration committee.
Which of the following does NOT form part of the objectives of a corporate governance best practice framework?
Separation of chairperson and CEO roles
Establishment of audit, nomination and remuneration committees
Minimisation of risk
Employment of non-executive directors
Are the following statements true or false?
True False
1. Maximising market share is an example of a financial objective.
2. Shareholder wealth maximisation is the primary financial objective for a company listed on a stock exchange.
3. Financial objectives should be quantitative so that their achievement can be measured.
True, False, True
True, True, True
True, False, False
False, True, True
A school decides to have larger classes, and examination results suffer as a result. In terms of the 'value for money' framework, which of the following statements is true?
Economy has increased but efficiency has decreased.
Efficiency has increased but effectiveness has decreased.
Economy has increased but effectiveness has decreased.
Economy has increased but efficiency and effectiveness have decreased.
Are the following statements true or false?
True False
1. Accounting profit is not the same as economic profit.
2. Profit takes account of risk.
3. Accounting profit can be manipulated by managers.
True, False, False
True, False, True
False, False, True
True, True, False
A government body uses measures based upon the 'three Es' to measure value for money generated by a publicly funded hospital.
Which of the following relates to efficiency?
Cost per successfully treated patient
Cost per operation
Proportion of patients readmitted after unsuccessful treatment
Percentage change in doctors' salaries compared with previous year
Are the following statements true or false?
True False
1. Cash flow forecasting is primarily the responsibility of financial reporting.
2. Whether to undertake a particular new project is a financial management decision.
True & False
True & True
False & False
False & True
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 shareholder
To maximise the level of annual profit
Indicate, by clicking in the relevant boxes, whether the following objectives are financial or non‐financial objectives of a company.
Objective
1. Maximisation of market share
2. Earnings growth
3. Sales revenue growth
4. Achieving a target level of customer satisfaction
5. Achieving a target level of return on capital employed
Financial - 1, 3
Non‐financial - 2, 4 & 5
Financial - 2, 3 & 5
Non‐financial - 1 & 4
Financial - 2, 4 & 5
Non‐financial - 1 & 3
Financial - 4 & 5
Non‐financial - 1, 2 & 3
Which THREE of the following are the main types of decision facing the financial manager in a company?
A. Income decision
B. Investment decision
C. Dividend decision
D. Financing decision
E. Appraisal decision
F. Budget decision
A, B & D
B, C & D
C, D, F
B, D & F
Which TWO of the following are examples of financial objectives that a company might choose to pursue?
A. Dealing honestly and fairly with customers on all occasions
B. Provision of good working conditions and industrial relations
C. Earning above a particular level of return on capital employed
D. Producing environmentally friendly products
E. Restricting the level of gearing to below a specified target level
B & D
A & C
C & E
A & E
Value for money is an important objective for not‐for‐profit organizations.
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 organization services
Searching for ways to diversify the finances of the not‐for‐profit organization
Decreasing waste in the provision of a service by the not‐for‐profit organization
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
Indicate, by clicking in the relevant boxes, whether the following statements are true or false.
1. Financial management is concerned with the long‐ term raising of finance and the allocation and control of resources
2. Management accounting is concerned with providing information for the more day‐to‐day functions of control and decision‐making
3. Financial accounting is concerned with providing information about the historical results of past plans and decisions
True, False, True
True, False, False
False, True, True
True, True, True
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?
A. Company directors
B. Customers
C. Suppliers
D. Employees
E. Finance providers
B & C
A & D
B & D
A & E
What is the main purpose of corporate governance? A T B C D t
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?
Shareholders
Managers
Auditors
Which TWO of the following statements are correct?
1. Maximising market share is an example of a financial objective
2. Shareholder wealth maximisation is the primary financial objective for a company listed on a stock exchange
3. Financial objectives should be quantitative so that their achievement can be measured
4. Three E’s are used as a performance measure to assess value of money in not for profit organisations. The three E’s stand for economy, efficiency and environment
2 & 3
1 & 4
2 & 4
1 & 3
