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?
A.To achieve long-term growth in earnings
B.To maximize the level of annual dividends
C.To maximize the wealth of its ordinary shareholder
D.To maximize the level of annual profits
2.Financial management focuses on financial objectives. Which of the following are financial objectives?
1.Maximization of market share
3.Sales revenue growth
4.Achieving a target level of customer satisfaction
5 Achieving a target level of return on capital employed
A.1 and 5 only
B.2 and 4 only
C.2, 3 and 5 only
D.1,2, 3 and 4 only
Achieving market share (a relative measure), or customer satisfaction (a qualitative measure), are non-financial objectives.
3.Which of the following is not one of the three main types of decision facing the financial manager in a company?
Financial management aims to ensure that the money is available to finance profitable projects and to select those projects which the company should undertake. Once profits have been made the decision then needs to be made about how much to distribute to the owners and how much to re-invest for the future. Income decisions are really sub-divisions of the investment decision.
4.Which of the following is an example of a financial objective 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.Producing environmentally friendly products
D.Restricting the level of gearing to below a specified target level
This is a financial objective that relates to the level of financial risk that the company is prepared to accept. The other objectives are non-financial.
5.Value for money is an important objective for not-for-profit organizations.
Which of the following actions is consistent with increasing value for money?
A.Using a cheaper source of goods and thereby decreasing the quality of not-for-profit organization services
B.Searching for ways to diversify the finances of the not-for-profit organization
C.Decreasing waste in the provision of a service by the not-for-profit organization
D.Focusing on meeting the financial objectives of the not-for-profit organization