Financial management function PART A

Sections:

The nature and purpose of financial management

What is financial management?

Financial planning

Financial control

Financial management decisions

Financial management decisions (Q)

Management accounting, financial accounting and financial management

Management accounting, financial accounting

Management accounting, financial accounting and financial management

Financial objectives and the relationship with corporate strategy

Strategy

Corporate objectives

Objectives should relate to the key factors for business success, which are typically as follows.

Financial objectives: Shareholder wealth maximisation

Three possible methods for the valuation of a company

Shareholder wealth maximisation

Total shareholder return (Q)

Profit maximisation

Although profits do matter, they are not the best measure of a company's achievements. (Q)

Earnings per share growth (Q)

Note that:

Other financial targets In addition to targets for earnings, EPS and dividend per share, a company might set other financial

Other financial targets (Q)

Non-financial objectives A company may have important non-financial objectives which must be satisfied in order to ensure the

Non-financial objectives

Non-financial objectives

Other non-financial objectives

Stakeholders and impact on corporate objectives

Stakeholders

The various stakeholder groups in a firm can be classified as follows

Objectives of stakeholder groups

Objectives of stakeholder groups

Objectives of stakeholder groups

Stakeholder groups, strategy and objectives

Shareholders and management

Shareholders and management

Shareholders and management

Shareholders, managers and the company's long-term creditors

Shareholders, managers and the company's long-term creditors

Shareholders, managers and government

Shareholders, managers and government

Shareholders, managers and government

Measuring the achievement of corporate objectives

Measuring financial performance

The broad categories of ratios

Ratio pyramids

Profitability

Profitability and return: the return on capital employed

Evaluating the ROCE

Secondary ratios

Return on equity

Gross profit margin, the net profit margin and profit analysis (Q)

Debt and gearing ratios

Shareholders' investment ratios

Shareholders' investment ratios

The dividend yield (Q)

Earnings per share (EPS)

The price earnings ratio (Q)

Changes in EPS: the P/E ratio and the share price

Encouraging the achievement of stakeholder objectives

Managerial reward schemes

Examples of such remuneration incentives are:

Beneficial consequences of linking reward schemes and performance

Problems associated with reward schemes

Problems associated with reward schemes

Regulatory requirements

Corporate governance

There are a number of key elements in corporate governance.

Corporate governance codes of good practice generally cover the following areas.

Corporate governance codes of good practice generally cover the following areas.

Stock exchange listing regulations

Financial and other objectives in not for profit organisations

Not for profit sectors

Objectives

Here are some possible objectives for a NFP organisation.

Here are some possible objectives for a NFP organisation.

Value for money

This is usually accepted as requiring the application of economy, effectiveness and efficiency (sometimes known as the 3Es).

More formally, these criteria can be defined as follows.

Example: Economy, efficiency, effectiveness

Performance measures

Here are a number of possible solutions to these problems.

Example: Performance measures

Example: Inputs and outputs

Example: Inputs and outputs

Example: Inputs and outputs

Chapter Roundup

Chapter Roundup

Chapter Roundup

Chapter Roundup

Chapter Roundup

The end of part a

Financial management function PART A

Sections:

The nature and purpose of financial management

What is financial management?

Financial planning

Financial control

Financial management decisions

Financial management decisions (Q)

Management accounting, financial accounting and financial management

Management accounting, financial accounting

Management accounting, financial accounting and financial management

Financial objectives and the relationship with corporate strategy

Strategy

Corporate objectives

Objectives should relate to the key factors for business success, which are typically as follows.

Financial objectives: Shareholder wealth maximisation

Three possible methods for the valuation of a company

Shareholder wealth maximisation

Total shareholder return (Q)

Profit maximisation

Although profits do matter, they are not the best measure of a company's achievements. (Q)

Earnings per share growth (Q)

Note that:

Other financial targets In addition to targets for earnings, EPS and dividend per share, a company might set other financial

Other financial targets (Q)

Non-financial objectives A company may have important non-financial objectives which must be satisfied in order to ensure the

Non-financial objectives

Non-financial objectives

Other non-financial objectives

Stakeholders and impact on corporate objectives

Stakeholders

The various stakeholder groups in a firm can be classified as follows

Objectives of stakeholder groups

Objectives of stakeholder groups

Objectives of stakeholder groups

Stakeholder groups, strategy and objectives

Shareholders and management

Shareholders and management

Shareholders and management

Shareholders, managers and the company's long-term creditors

Shareholders, managers and the company's long-term creditors

Shareholders, managers and government

Shareholders, managers and government

Shareholders, managers and government

Measuring the achievement of corporate objectives

Measuring financial performance

The broad categories of ratios

Ratio pyramids

Profitability

Profitability and return: the return on capital employed

Evaluating the ROCE

Secondary ratios

Return on equity

Gross profit margin, the net profit margin and profit analysis (Q)

Debt and gearing ratios

Shareholders' investment ratios

Shareholders' investment ratios

The dividend yield (Q)

Earnings per share (EPS)

The price earnings ratio (Q)

Changes in EPS: the P/E ratio and the share price

Encouraging the achievement of stakeholder objectives

Managerial reward schemes

Examples of such remuneration incentives are:

Beneficial consequences of linking reward schemes and performance

Problems associated with reward schemes

Problems associated with reward schemes

Regulatory requirements

Corporate governance

There are a number of key elements in corporate governance.

Corporate governance codes of good practice generally cover the following areas.

Corporate governance codes of good practice generally cover the following areas.

Stock exchange listing regulations

Financial and other objectives in not for profit organisations

Not for profit sectors

Objectives

Here are some possible objectives for a NFP organisation.

Here are some possible objectives for a NFP organisation.

Value for money

This is usually accepted as requiring the application of economy, effectiveness and efficiency (sometimes known as the 3Es).

More formally, these criteria can be defined as follows.

Example: Economy, efficiency, effectiveness

Performance measures

Here are a number of possible solutions to these problems.

Example: Performance measures

Example: Inputs and outputs

Example: Inputs and outputs

Example: Inputs and outputs

Chapter Roundup

Chapter Roundup

Chapter Roundup

Chapter Roundup

Chapter Roundup

The end of part a

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Financial management function PART A

1. Financial management function PART A

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