FN301_Ch.

1: Functions of the Financial Manager

Lecturer: Mr. Tumong

Brain Teasers
1. Dividends in the UK are taxed at

10% at source. If Reiko received a share dividend cheque of 300, what was the gross amount of the dividend?

A speculator exchanges 500,000 into Euros at an exchange rate of 68p,

How many Euros will they get for their money? How much profit will they make if they exchanged back to sterling at 71p?

Learning Objective
By the end of this lesson, you should be able to explain how the financial manager uses Economic, Accounting & Financial intelligence to Maximize Shareholder Wealth.

Aim of the Financial Manager

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Credit Control
Or Revenue Management

Inventory control
Definition: the process of managing the timing and the quantities of goods to be ordered and stocked, so that demands can be met satisfactorily.

Raising capital through debt/equity markets

Issuance of Bonds
What are bonds?

Issuance of Shares
What are shares?

Capital budgeting
Definition: the process of making long-term planning decisions typically for capital goods/ fixed assets Capital budgeting tools include:
Accounting Rate of Return Internal Rate of Return, and, Net Present Value methods

Dividend Decision
Decision made by company directors that relates to the amount and timing of any cash payments made to the companys shareholders. Free cash flows and stock prices greatly influence a firms dividend decision

Shareholder wealth vs social responsibility

Social responsibility relates to the principle that companies should contribute to the welfare of society and not be solely devoted to maximizing shareholders wealth. CAN COMPANIES BE SOCIALLY RESPONSIBLE AND ORIENTED TOWARD SHAREHOLDER WEALTH AT THE SAME TIME? See McDonald's case study

conclusion
Even though the financial managers primary role is to increase shareholders wealth through the use of accounting and economic intelligence, they should bear in mind that ethical standards have to be upheld in fulfilling their duties

For next class

Read chapter 2, paying particular attention to the SCF.
Enjoy the forthcoming week-end